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Rm11

New member seeking advice about paying off old debt/charge off's and PFD's

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Hey everyone,

 

My apologies for the lengthily post, but I want to try to be a detailed as possible so anyone with knowledge on this subject can help

Back before the recession hit I was 25 years old with stellar credit, 8 paid autos, all good standing and paid cards etc.  Then all that changed and I went bad on about 30k in debt.  Fast forward to 2016 and thankfully I'm financially back on my feet, but my credit score doesn't reflect that, though it is improving.  At one point credit karma (which I know isn't very accurate) said I was 485 which was about a year and a half ago.  I'm currently showing on there a 627 T/U and a 623 Eqfx, which I know in the real world translates to high 5's.  I've always kept a good auto loan obviously because I need a car, and I wanted to have that good revolving trade line for when I get things moving again.  Back in april with some string pulling (a lot actually) I leased my current vehicle at tier 1. I also had my fiancé add me as an authorized user on 3 of her credit cards right after I leased the vehicle to show good revolving credit....all of this has helped, but now is where I hit the wall.

I've been hovering in that credit karma low 600 range for a few months and I know it's not raising because I have 4 collections accounts totaling out about $2,300.  I was initially going to pay them all off last week when I started doing some googling and found that they may not be the best approach.  One account is a small cap one account for $225, the other a credit one for about $550, another is Merrick Bank for about $600, $530 in medical bills, and $700 from electric company after I moved.  The oldest account on here is not even 2 years old so SOL is not an option.I don't need my credit score to show a 700 tomorrow, but within the next year I want to buy a house.  My thoughts are if I pay these remaining debts, even without a PFD I'd imagine the accounts showing 0 is better than showing a balance, and my good trade lines will outweigh the bad ones more and more as months pass.  However now that I know PFD even exist I'm much more inclined to go that route.  I already tried making a few phone calls today.  Cap one transfered me to a company that didn't answer the phone, and credit one transferred me to a company that said the were closed.  The medical bill was a little more tricky.  They told the debt is in collections, and collections told me as of aug 8 the hospital took the debt back.  The hospital also stated they can't guarantee if it will be removed, but If i pay them that they report to the collection agency that its a 0 balance and to remove it.  The collection agency was however signing a different song.  Both women were actually very nice and helpful, but the woman at the collection agency said that they don't actually buy the debt, they just help collect it.  Furthermore being that the the hospital took it back, she advised me that she was going to contact the hospital to see if they will let them handle it again, and if I make the payment through them they can try to do a PFD.  That part kind of scared me.  She assured me if they do get it back, that it won't be rereported, so I guess well see.

 

Thanks in advance!

 

 

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Neither Cap1 or CreditOne do pay for delete.  Medical collections depends on the provider.  You are correct that zero balances are better than unpaid when it comes to collections.  You won't get a mortgage with negatives reporting so settling them now is better because you have more leverage to settle for less.  Once the creditors find out you have a mortgage app in you lose all your leverage because they know you can't get one with the collections open.

 

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51 minutes ago, Clydesmom said:

Neither Cap1 or CreditOne do pay for delete.  Medical collections depends on the provider.  You are correct that zero balances are better than unpaid when it comes to collections.  You won't get a mortgage with negatives reporting so settling them now is better because you have more leverage to settle for less.  Once the creditors find out you have a mortgage app in you lose all your leverage because they know you can't get one with the collections open.

 

Thank you for the advice.  When you say I won't get a mortgage with negatives reporting, you mean reporting with a balance or reporting at all?  Reason I ask because correct me If I'm wrong but even if I do pay them, they will continue to report as collection/charge off accounts except now with a $0 balance until the SOL drop off.   As far as settling for less,  I know having "paid for less than agreed" on your credit is just as bad as having a charge off, so when I pay it I'm paying it in full.

 

 Because of this situation I'm going to end up putting the mortgage in my fiancé's name to avoid getting clubbed with interest...but I still want my credit fixed.

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8 minutes ago, Rm11 said:

When you say I won't get a mortgage with negatives reporting, you mean reporting with a balance or reporting at all?

No.  Your credit report shows negative and positive accounts.   Positive accounts with a balance are fine.  

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23 minutes ago, Rm11 said:

When you say I won't get a mortgage with negatives reporting, you mean reporting with a balance or reporting at all?

Reporting with a balance.  The under writers don't want anything on there that could become a lawsuit and ultimately a judgment lien on the property.

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3 hours ago, BV80 said:

No.  Your credit report shows negative and positive accounts.   Positive accounts with a balance are fine.  

LOL...thanks, I got that part.  

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3 hours ago, Clydesmom said:

Reporting with a balance.  The under writers don't want anything on there that could become a lawsuit and ultimately a judgment lien on the property.

Gotcha, that was my thinking as well....but after doing some research or reading it can "hurt" your credit by paying off old stuff I had to investigate.  I'm guessing people just meant it will initially lower your score because it gets reported again instead of staying old.

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It can hurt because it resets the sol.  So don't pay unless your going to pay it off.  Settling for less than full amount is no worse than paying it in full if you can't get a pay for delete.  As long as the balance is zero when your done, doesn't matter.  Also, Your accounts are too recent for you to not worry about getting sued.  They usually let the interest accrue up, and sue during the last year or so before the SOL is up so they can collect as much as possible, and they figure this gives the person time to recoup, so chances are better they will have a bit a money for them to get.

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1 hour ago, shellieh98 said:

Settling for less than full amount is no worse than paying it in full if you can't get a pay for delete.

I don't think settling for less without a pay for delete hurts.   Potential creditors would see that the consumer doesn't ignore debts and tries to pay them as best he can.

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On August 19, 2016 at 0:53 PM, shellieh98 said:

It can hurt because it resets the sol.  So don't pay unless your going to pay it off.  Settling for less than full amount is no worse than paying it in full if you can't get a pay for delete.  As long as the balance is zero when your done, doesn't matter.  Also, Your accounts are too recent for you to not worry about getting sued.  They usually let the interest accrue up, and sue during the last year or so before the SOL is up so they can collect as much as possible, and they figure this gives the person time to recoup, so chances are better they will have a bit a money for them to get.

I could be wrong here....

Ironically, I deal with giving people loans for a living.  I've had bank analyst (who i know aren't always the sharpest knives in the draw) say "settled for less than agreed" is one of the single worst thing to have on your credit, aside from a few other things.  Although this is my job yes I know how to get people approved and what to look for, but I have no idea how the best way to clean my own up from years ago.  

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I don't agree.  Settling for less shows you want to pay your bills, but did not have the means at the time to pay it in full.  Now if you go apply for a loan 2-3 months later, yea it might not look good, but 6 mo or a year down the line says you pay your bills, and if you can't, you don't just not pay.

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3 hours ago, Rm11 said:

 I've had bank analyst (who i know aren't always the sharpest knives in the draw) say "settled for less than agreed" is one of the single worst thing to have on your credit, aside from a few other things.

I agree that they're not the sharpest knives in the drawer.    Some lenders have told me that they'd rather deal with consumers who try to pay and work out settlements than with those who simply do nothing. 

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24 minutes ago, Tim Clark said:

I used this company to help me fix my bad credit.. They REALLY helped! [dangerous link to credit repair removed]

DO NOT use any credit repair site.  It is illegal to promise results or require payment up front.  Not to mention it isn't anything you can't do on your own for free.  Didn't click the link as it is probably dangerous.  

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9 minutes ago, Clydesmom said:

DO NOT use any credit repair site.  It is illegal to promise results or require payment up front.  Not to mention it isn't anything you can't do on your own for free.  Didn't click the link as it is probably dangerous.  

The spammer has left the building.

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