Best Approach to Paying Collections

[JenE]

What is the name of your state? CA

My husband has 6 or so collections against him from the late ninties Indiana. Most are medical. We want to pay them off to start cleaning up his credit. I believe most are legit, one looks like it might be a duplicate so needs to be researched a little further.

Any tips to contacting the credit agencies to arrange pay off? Is there something we can negotiate with them as terms of the pay off that would look more favorable on the credit report?

We have the money set aside to take care of these, I'm more concerned with what would effect his (our) rating most positively rather than trying to get out of paying any portion of them.

ThanksWhat is the name of your state?

[debtcollector`]

Originally Posted by JenE

What is the name of your state? CA

My husband has 6 or so collections against him from the late ninties Indiana. Most are medical. We want to pay them off to start cleaning up his credit. I believe most are legit, one looks like it might be a duplicate so needs to be researched a little further.

Any tips to contacting the credit agencies to arrange pay off? Is there something we can negotiate with them as terms of the pay off that would look more favorable on the credit report?

We have the money set aside to take care of these, I'm more concerned with what would effect his (our) rating most positively rather than trying to get out of paying any portion of them.

ThanksWhat is the name of your state?

Any collection item you pay that is already on the credit report will be reported as paid. It looks better and raises the score (although that is hotly debated) but is still more negative than not having been late at all.

My best advice is to open a separate checking account at your bank. Fund it with the money you are using to pay these debts. Then only issue checks or EFTs from this account.

Ask to have receipts mailed to you. Save everything for at least five years.

DC

[AmarieNorton]

Originally Posted by JenE

What is the name of your state? CA

My husband has 6 or so collections against him from the late ninties Indiana. Most are medical. We want to pay them off to start cleaning up his credit. I believe most are legit, one looks like it might be a duplicate so needs to be researched a little further.

Any tips to contacting the credit agencies to arrange pay off? Is there something we can negotiate with them as terms of the pay off that would look more favorable on the credit report?

We have the money set aside to take care of these, I'm more concerned with what would effect his (our) rating most positively rather than trying to get out of paying any portion of them.

ThanksWhat is the name of your state?

Might be worth your time to do some research before you begin paying.

Start here - [url]http://creditboards.com/forums/index.php?showforum=39[/url]. I think you’ll find that there are favorable options if you’re able to pay everything off at once for each bill (instead of making small payments. If you make small payments then I think your options might be limited and it could take awhile before you see any improvements in hubby’s credit score).

Good luck!

[Ladynred]

Paying old collections does NOT raise your score. As DC says, this is hotly contested but the fact is the FICO scoring model will still see it as a paid collection, which is still a NEGATIVE tradeline and it will not improve your score. In fact, paying old collections can actually LOWER your score.

You might want to do some reading:
[url]http://www.myfaircredit.com/forum/viewtopic.php?t=2720[/url]

[JenE]

Thanks to all of you for your responses and links. I will definitely look into it a little futher.

Some of the collections are probably coming up on 7 years. After 7 years do these drop off automatically or do you need to follow up with the collection agency to get this removed? Will there be no trace on your report of these old collections if they are removed after the 7 year limit?

Thanks again.

[Ladynred]

Negative items are supposed to drop off at 7-1/2 years from the date of first delinquency. Once they drop off, they can NOT be legally put back on, and no collection can outlive the obsolescence of the original debt.

IF they do not drop off, dispute them with the credit bureaus as obsolete.
Once they're off your reports, they're gone. There are only a few instances where items older than that can be seen for a max of 10 years.

[debtcollector`]

Originally Posted by Ladynred

Negative items are supposed to drop off at 7-1/2 years from the date of first delinquency. Once they drop off, they can NOT be legally put back on, and no collection can outlive the obsolescence of the original debt.

IF they do not drop off, dispute them with the credit bureaus as obsolete.
Once they're off your reports, they're gone. There are only a few instances where items older than that can be seen for a max of 10 years.

I agree, but would qualify LNR's comments a little further.

Checks for insurance policies of more than $150,000 or jobs paying more than $75,000 go back ten years. Security clearances -- depending on the level -- are not limited.

DC

[Ladynred]

Checks for insurance policies of more than $150,000 or jobs paying more than $75,000 go back ten years. Security clearances -

Yah.. those are the circumstances I was referring too.. just didn't feel like going to look them up at this hour of the night

[JenE]

All of the collections are unpaid medical bills. I'll definitely be gettting an updated credit report so I can verify the date of the last deliquency.

I was under the impression that paying these off would positively impact his/our credit because several months ago I was getting a home equity line of credit and had tried to get the loan in both of our names (I had purchased the condo in my name only when we were engaged). The loan agent brought the collections up as an issue causing us to get a higher interest rate and had said "have you considered just paying these off" as if that would suddenly improve the situation. I ended up being able to get it in my name only but we are definitely wanting to refinance our mortage in the next few years and I want to make sure we are in a better position to qualify for a good rate.


Oh, one more question. Does that fact that the debt was incurred in Indiana and he moved to CA in 2000 have any impact on the SOL?
Thanks again to all of you for the helpful info.

[debtcollector`]

Originally Posted by JenE

I was under the impression that paying these off would positively impact his/our credit because several months ago I was getting a home equity line of credit and had tried to get the loan in both of our names (I had purchased the condo in my name only when we were engaged). The loan agent brought the collections up as an issue causing us to get a higher interest rate and had said "have you considered just paying these off" as if that would suddenly improve the situation.

It will impove the situation. LNR and I disagree on this, but regardless of the few points it may (with courtesy to LNR ) raise the score the big thing is that the lendor's investment is safer. It is hard to resell mortgages when there is that kind of issue in the CBR, so I've been told.

Originally Posted by JenE

Oh, one more question. Does that fact that the debt was incurred in Indiana and he moved to CA in 2000 have any impact on the SOL?

Thanks again to all of you for the helpful info.[/quote]
The simple answer is that the SOL tolls when you leave the state. The longer answer can be found by searching this forum for "SOL toll and chien".

DC

[JenE]

I ran the hubby's credit this weekend through myfico.com. The last time I had looked at his reports were in Sept. 05 and had gotten the free annual reports, so did not have visibility to his fico scores. At that time there were about 6 collections on all 3 reports. Last time I had purchased the fico reports was in 2004.

I was pleasantly suprised to see that his scores had gone up 60-100 pts since late 2004. It appears that most of the collections have dropped off since last Sept, as well as a judgement from the 90's. I had convinced him to get a secured credit card a year or two ago which he has always paid off and has since become unsecured and his limit is up to about $800 now. Not huge but previously he had no revolving credit lines so this is probably helping as well.

We are going to use the money we had earmarked for this instead to pay off his student loans. Should we expect this to positively impact his scores much? He has been paying as agreed for the past several years and the account is in good standing.

I'm also considering adding him to a credit card I rarely use but has a very high limit as an authorized user (don't plan on giving him the card, we typically don't buy a lot on credit so no need). Will it be flagged on his credit report as a card he is authorized on, or will it report as if it is his card?

Thanks