Credit repair after you hand over your money to the debt collectors becomes much more difficult…darn near impossible. Do not flush any leverage you have to force debt collectors to work with you. Get this right or else.
Paying off even one collection “the wrong way” can be very expensive …and hand you even worse credit.
Hard to believe, isn’t it?
Where is the logic in this?
Every day people think they’re doing what is right by paying off collections.
They think their credit scores will improve by paying off collections.
Unfortunately, it’s not the way it it, and (I’m sorry but) I don’t know if prayer works one Debt Collectors and Credit Bureaus.
What you see below is a snippet of the exact question left for me inside my forums.
Surprisingly (to me at least) I receive this type of question all the time from people who think they’re helping their credit and their conscience by paying off bad debt.
In “Lounleah’s” case, she/he lost leverage by paying. It’s your money the debt collectors want.
Not all is lost for “Lounleah” as I shared with him/her in my response. However, don’t believe that making a payment or paying the debt off will improve your credit.
It will not! Click “Read More” to avoid throwing your money away and lowering your credit scores even more.
GET IT IN WRITING OR ELSE….
Important: ‘Settling’ an old debt will hurt your score unless you get an agreement in writing that the account you’re paying off will be reported “paid as agreed.”
…even though Fair, Isaac & the credit reporting agencies are telling you that making payments on older bad credit accounts will not hurt your scores.
They claim they have fixed this “glitch” in the scoring algorithm.
To that I respond, “BULLSH*T”
They claim in the past when you made a payment on an older, bad credit account you reset the clock, making it appear this account is a current account.
It is not fixed!
In the eyes of the FICO scoring, new credit activity (both good and bad) get weighed more heavily.
“Recency,” or how long it’s been since you’ve had a negative mark, matters a lot to your credit score. What this means is that recent bad credit accounts penalize you more than older bad credit accounts.
According to the developers (Fair Isaac) of the 3-digit scoring system , the “new & improved” scoring formula can distinguish between the new payments and actual new delinquencies.
You still can hurt your score by “settling” an account for less than what you owe. Such settlements may get the creditor off your back, but bad credit reporting still is bad credit reporting.
The mark “settled” on your credit report can sometimes be worse for your FICO score than just leaving the account open and unpaid.
You want a creditor or debt collector to agree in writing to report “pays as agreed” in exchange for your money.
Have you paid off a collection and seen your credit scores improve? Or have you experienced the opposite…your scores dropped?
Please share your experience below with all of us. Certainly, I explain how to examine each bad credit account on your credit reports & whether you should go after a deletion, a settlement or just leave it alone.
Yes, there is a step-by-step approach to “mining for deletions.”
Credit repair after doing what’s “right” is not fair or right. Before you consider paying off or making a payment on an older account, get it in writing that your credit scores will benefit from paying this account off.
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{ 1 comment… read it below or add one }
Great post – so few people understand what is in their credit report and how important it is to maintain a respectable score. They are throwing away their hard earned money, and the ones who have the worst credit are in the least position to afford it.