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Thread: Good credit after collections??

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    Default Good credit after collections??

    I took this budget/finance class this morning...since Im having another baby, I figure its bout time to learn. Ive been so dumb with my money! I wish I took this class before!
    Anyway.... the teacher was saying that no matter whats on your report...that you could have good credit inthe futurre if you work hartd to repair it. Well I have a repo, bad credit cards....all that,and Im only 21. He said no problem.
    BUT collections knows me by my first name! He said once they get involved, its no point to pay them because it wont do any good, and that my credit will never be OK again. Anybody know about this? I really want to pay all my debts and (wait 7 yrs..ugh) and get rid of the headaches and maybe buy a house on my own for me and the girls. Please tell me Im not screwed!

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    God/dess Emily's Avatar
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    Default Re: Good credit after collections??

    I think what he's saying in that it's no use to pay them is that (perhaps) the debts are old enough that they will be removed from your record soon. By paying them off, you are putting it on your record for another 7 years.

    people can declare bankruptcy and get mortgagess. You will need to do some work, but it's definitely repairable.

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    Default Re: Good credit after collections??

    NEVER pay a collection agency unless you get them to agree in writing to remove the debt if it is paid. I would say at this point to probably avoid paying these bills altogether. You may stir up more dirt than is already stirred up by doing so.

    It is not always necessary to wait 7 years for debts to be removed. Once the creditors "give up on collecting a debt and purge it from their files, a credit bureau dispute which comes back unverified can remove it several years earlier.

    And, something most people don't know as Emily said is that once you pay a collection account, the 7 year statute starts from the date of payment. "Paid Collection" on your credit bureaus is just as bad as unpaid.

    My fiancee' owned his own credit repair agency for 8 years. PM me if you are interested and I can give you a source that can teach you how to correct your situation.My guy learned the business from this source years ago, and it can help you get on track if you do what the source says.

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    Veteran Member Scout's Avatar
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    Default Re: Good credit after collections??

    Tina, I have a bill (which I do not owe!) in collections. I called the company I supposedly owe and they said that they have "evidence" that I do owe. I don't plan on paying it ... EVER. I plan on disputing it. How many years must I wait to dispute? I would like a shot at getting it dropped from my credit reports. How long does it take them to give up on me?

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    God/dess VenusGoddess's Avatar
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    Default Re: Good credit after collections??

    They have 7 years from the date of the last payment/default. If you are going to dispute it (and it's fairly recently) do it now. If they have "evidence" (legal evidence is a signed contract...or something like that) then they have to provide that to you within 30-60 days of you contacting them for that proof. If they cannot/do not provide that information for you, it will be considered an invalid debt and it will be wiped off.

    Of course, its a little more involved than that...and you should get more info before proceeding, but that's the gist of it.

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    Default Re: Good credit after collections??

    So in Scout's case would it be better to dispute the bill with the collection agency or the credit reporting agency?


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    God/dess VenusGoddess's Avatar
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    Default Re: Good credit after collections??

    It would depend on how old the bill is. If its several years old, CA...if its fairly new...company (not collection agency...the original company).

    But, like I said...get more info on this.

  8. #8
    PhillyDancer1982
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    Default Re: Good credit after collections??

    Yes, it will be very hard to get credit after you have collections. And in most cases, it's not the wisest thing to quickly pay the bill collectors. However, it is possible to establish decently good credit over time, before the 7yr mark when the collections expire from your credit report. Overall, paid collections look better than unpaid collections, but not much better. I agree with the others who say to try and dispute the collections or to negotiate in writing that you will only pay if they remove the collections account from your credit reports. I do not know if this is still true or not, but as of a few years ago, TransUnion only reports collections accounts that have a current balance of $100 or greater; so for TransUnion, paid collections accounts(or very small, insignificant ones) will be dropped from your credit report BEFORE the 7yrs SOL is up. So basically if you are applying for credit and you KNOW for sure that they base their decision on your TransUnion report, maybe paying some of the collections off wouldn't be such a bad idea.

    IMPORTANT NOTE: If you DO pay a collections agency, do make sure you check your credit report 2 months after making payment. Often, a collections agency will promise to delete the account upon payment, or at the very least mark the account "paid in full," but then neglect to do this. If this happens, you will have to dispute the account with the credit bureaus. I've had friends who diligently paid their collections, then applied for credit a few months later and been turned down because of an "unpaid collections account" that was indeed paid already. By the time that they realized the collections agency was too lazy to update their credit report as promised, yeah they got the mistake fixed but by that time it was too late to get approved for the credit they'd applied for.

    If you establish a decent amount of good credit, this will somewhat counteract the bad effect of the collections accounts. Over time, the effects of good credit will grow and the bad effects of the collections accounts will mitigate and have less of a bad impact on your credit score. It is still possible to establish a good credit score within a few years of getting a collections account. However, sometimes even with a good credit score and other accounts in good standing, creditors may choose to decline you for credit simply BECAUSE of the collections. So the point is, it is possible to improve your credit, but be willing to accept subprime credit cards and pay higher interest rates for the next several years, and sometimes even up to the point that the collections and the other "derogatory" accounts have fallen off your credit report.

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    Default Re: Good credit after collections??

    Quote Originally Posted by VenusGoddess
    It would depend on how old the bill is. If its several years old, CA...if its fairly new...company (not collection agency...the original company).

    But, like I said...get more info on this.
    The bill is less than a year old. I called the original company and they won't budge. My only course of action is to dispute the collection agency through the credit reporting agencies.

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    Default Re: Good credit after collections??

    You cannot dispute a "valid" bill with the collection agency. The bill is less than a year old, you really need to do the dispute with the "original debtor". The collection agency shit will fall off if you resolve the original dispute.

    Go to the credit repair website and get the form letters for disputing an account. The letter basically states, "I do not owe this debt. I am now demanding all documentation, with my signature, that proves that I owe this debt (as pertaining to law)." Do NOT sign the letter (so they can't use your signature to put on docs). But, use the tried and true form letter (don't make up your own) for the proper wording. The company has to provide you with ALL paperwork proving that you do, in fact, owe. That pretty much means a signed contract and proof that you are the person who owes. Make sure you send the letter certified mail (it'll have date of delivery and signature of person accepting).

    They have 30-60 days to comply (weekends included). If they do not send this info, then you send a letter to the CB with the copy of the letter you wrote to the company in dispute, a copy of the certified receipt and a letter to the CB stating that you dispute the account, and the company cannot or will not provide proof of debt. (Again, get the form letter off the credit repair site). And, demand that this account be removed from your credit along with all collection agency activity in regards to this fraudulent debt.

    It'll take a couple of months, but you can get it cleaned up.

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