Credit Score Question

[mill4023]

I tend to disagree. I have received from FICO from Transunion and it was only about 20 points off from CreditKarma. I also (previously) received my score from Experian (I think) and it was only 5 points off from CreditKarma.

You can disagree all you want. The fact that yours happens to be closer to the real number doesn't mean anything. The fact that mine is 100 points off and many others report it being 50 points or more off, is proof that it isn't an accurate score.

 

[alymae1010]

I tend to disagree. I have received from FICO from Transunion and it was only about 20 points off from CreditKarma. I also (previously) received my score from Experian (I think) and it was only 5 points off from CreditKarma.

Credit Karma pulls from Transunion. Credit Sesame pulls from Experian.

 

[Dizzy4DL]

CK has my score down over the last 6 months. For no reason that I can figure out?

I've had no negative items, didn't open any accounts, and carry no balances on my credit card. The only thing that changed is I paid off my car. Would that be a negative?

Also, CK thinks I need more loans/credit cards. Does that sound right?

 

[alymae1010]

CK has my score down over the last 6 months. For no reason that I can figure out?

I've had no negative items, didn't open any accounts, and carry no balances on my credit card. The only thing that changed is I paid off my car. Would that be a negative?

Also, CK thinks I need more loans/credit cards. Does that sound right?

When you say you carry no balances, does that mean you pay everything down to $0 before the statement is cut, or you pay everything when it is due? I know that 0% utilization of credit can result in a credit hit.

 

[Dizzy4DL]

When you say you carry no balances, does that mean you pay everything down to $0 before the statement is cut, or you pay everything when it is due? I know that 0% utilization of credit can result in a credit hit.

I pay a few days before the due date.

 

[NYCDiane]

I plan to pay off/pay down debt if I end up with a refund this year. Will that increase my credit score? How many points does it usually go up if you make a significant dent in your debt?

I plan to pay off 3 cards as well as my car note (all small amounts) as well as settle one card that went into collections and toss money toward a few other just to get them down.


I need my score to go up by at least 75 points by June!

 

[supersnoop]

How long since the last payment you made on the account in collections? A paid collection can actually be bad for your score.

Paying off accounts won't necessarily help. It's the proportion of debt to total credit available. Having $10,000 in debt with $100,000 available is "better" than having $2,000 in debt with only $10,000 available.

 

[NYCDiane]

The collections account isn't that old. It went delinquent last year when I was having some major problems. All my accounts went delinquent but now they are listed as "paying as agreed" on my credit report (although they are still listed in the 'potentially negative' section)

This particular account, for some reason, was sent to collections. The minute I got a collection letter, I called the agency and started making payments on it. I think the balance now is something like $1500 and I was going to try to settle for $500 --- regardless what you settle for, it appears on your credit report as "settled for an amount less than the amount owed". I don't like the idea of settling but the majority of the $1500 is late fees, overlimit fees, etc.

Why is paying off a collection account bad for your score?

 

[supersnoop]

Never pay a collection agency. The original account will show as written off and the new collection account will show as settled for less than the amount owed. If you've been paying them already, it's probably to late to undo the damage. You should spend some time reading up on the creditboards forum.

Ideally, you want to pay the full amount to the original creditor and then dispute the collection as invalid, this removing any trace from your report. Otherwise, any negotiation and all payments need to be predicated on complete removal.

 

[NYCDiane]

Never pay a collection agency. The original account will show as written off and the new collection account will show as settled for less than the amount owed. If you've been paying them already, it's probably to late to undo the damage. You should spend some time reading up on the creditboards forum.

Ideally, you want to pay the full amount to the original creditor and then dispute the collection as invalid, this removing any trace from your report. Otherwise, any negotiation and all payments need to be predicated on complete removal.

I just pulled my credit reports this week and this particular account is only listed on my report once. It's reported as charged-off but it shows the balance going down monthly due to the payments I've been making.

Is it bad for your score to have the account listed as "settled for less than the amount owed" ? Wouldn't that be better than just showing small payments over time?

Why is it that people say you shouldn't pay a collection agency? I used to work for one and when people paid us, we immediately notified the original creditor so they could update the customer's credit profile. We would also immediately send them a letter stating their account is settled once their payment cleared. I always hear people say "never pay a collection agency". Well, I contacted the original creditor and they said I HAVE TO go through the collection agency!

This credit score stuff is just so confusing to me! You never know what to believe!

 

[NYCDiane]

 

[Nayan]

https://www.creditkarma.com/question/if-i-pay-off-a-collection-account-will-my-credit-score-improve

 

[supersnoop]

People say that because that's how credit scores work. A paid collection will drop your score. You want to deal with the original creditor only, and work to have any collection removed from your report. Paying a collection agency doesn't change the fact that the original account was written off. You want to change that, too

 

[NYCDiane]

People say that because that's how credit scores work. A paid collection will drop your score. You want to deal with the original creditor only, and work to have any collection removed from your report. Paying a collection agency doesn't change the fact that the original account was written off. You want to change that, too

But what happens when you call the original creditor and they tell you that you can only deal with the collection agency (even though the original creditor still owns the debt)???

How do you get the original creditor to remove the collection off the report?


I have another account that was sold to a debt buying company (the last third of 2012 was VERY bad for me). How do I reconcile that??? They (the buyer) have not reported it to my credit report but the original creditor on that one states it was sold. The buyer is STILL adding interest to it and the amount is going up by about $60 per month. I was considering offering a 15% settlement on this one (since they probably bought it for 5%) but if they're not reporting to the credit bureaus, is it even worth it?????



All my other accounts are fine and listed as "paying as agreed". It's only these 2 that are killing me.

 

[NYCDiane]

bump

 

[supersnoop]

You should really get over to the creditboards.com forums; there's a ton of information to sift through over there.

In short, any time a debt collector contacts you, you should send an "I dispute, please verify" letter. They're required to verify and validate the debt in full before they can contact you again. I believe they have 30 days to verify the debt. If the don't, then you can dispute it on your credit report and they legally must remove it. If they actually get back to you, then you send a cease and desist letter to the debt collector. You state that you will only deal with the original creditor and they are legally restricted from contacting you ever again. Granted, they can still file a lawsuit and have the court serve you, or sell the debt to another collection agency, but if they call you, you can sue them. Hopefully, they'll return the account back to the original creditor and you can work something out with them.

If, however, you have the means to pay the debt in full, just write a check to the original creditor. I doubt they'll send it back. Once they cash it, write a letter to the debt collector stating that the debt is not valid because it's been paid in full with the original creditor.

Always communicate via certified mail with return receipt requested.


The Fair Debt Collection Practices Act (FDCPA) is complex and specific, and only applies to third party debt collectors. Do your research before you take my advice.

 

[Nayan]

Also please read the comments in the link I provided. There's some good information on what exactly you need to do and say to them.

 

[JBS2]

I have originated loans for over 20 years and the reason your credit score dropped when you paid the collection off was because it brought the activity on the collection account current. Remember, the older a collection account gets, the less impact it has on your credit score because it is getting older (it happened a long time ago). However, the minute you pay the collection off, it brings the activity current which looks like the collection just occurred and that is why the score drops.

Never pay a collection account off if you are wanting to purchase something short-term. If you are wanting to purchase long-term, then pay them off (starting with smallest amount and working your way up). You are screwed on the inquiries because there is no way to delete them but if you have any revolving credit, pay your balances down to 30% of the high-credit limit and keep them there (be sure to use the account every month). This will make your score increase a lot.

P.S. Many of the credit agencies (not credit bureaus) have "what if" simulators that you can go on and it will show exactly what your credit score will do if you pay a credit card balance down or get a collection account deleted.