Credit Score Question

Discussion in 'Et Cetera, Et Cetera' started by lucky8, Apr 4, 2011.

  1. lucky8

    Gold Member

    Joined:
    Oct 30, 2006
    Messages:
    3,716
    Likes Received:
    17
    Gender:
    Male
    I just checked my credit score for the first time in about 3 years...and it was pretty much what I expected considering I've used very little debt and got into a little trouble with my credit card a couple years ago. On my report, it is showing I have 1 delinquent account. The only thing I can find that is unpaid is a $70 bill from an old cable company (that my POS roommate apparently didn't pay after going our separate ways). Our cable was under my name so it was reported on my account (thanks for not paying your share dude!). This was 6 years ago.

    When I do the little "estimate your credit score" thing and select that I have no delinquent accounts rather than 1, my score jumps a good 55 points. Does anybody think this is actually correct? If I pay this bill from 6 years ago, will it really have that much of a positive impact on my score? I find this hard to believe...

    I'm not trying to improve my credit score so I can get a loan, I'd just like it to be higher for peace of mind. Since it's a 6 year old delinquency, doesn't that mean that a year from now it will be off my report? I mean, I was 19 years old at the time, am I really going to be punished for someone else's mistake for years to come? If it will be off my report in a year, I'm not going to pay it, but if it's going to stay on there for the next 3-5 years, I'll pay it. Any advice?
     
  2. monel

    Gold Member

    Joined:
    Aug 23, 2007
    Messages:
    1,687
    Likes Received:
    4
    Gender:
    Male
    Bad debts are not be automatically expunged from from a person's credit report after 7 years. It is just that lenders often do not consider accounts that far back. However that only applies to negative reports that have been resolved. For example a 30 day late payment or a bankruptcy. In your case however, the 7 years does not come into account because it shows as a current deliquency. Having said that it probably will not have any major impact on your credit score. For one it is very small and it is quite old. Remember you have a right to submit a letter of explanation to the credit reporting reporting bureaus to explain negative items on your report. Doing so will mitigate the impact of the negative statement when you apply for a loan or other credit. You can pay the debt but that will not remove it from your report. It will only show it as being now paid.
     
  3. lucky8

    Gold Member

    Joined:
    Oct 30, 2006
    Messages:
    3,716
    Likes Received:
    17
    Gender:
    Male
    So if I pay it my report will still show I have a delinquent account? Or will it show that in the past, I had a payment that I missed, but I have since resolved? Basically a 6 year late payment. If it's the latter, then it should be expunged from my report after 7 years according to everything I've read about it.

    I'm just not understanding this whole "delinquent" thing, where it came from, and how I can fix it. Because I have absolutely nothing that could be delinquent except for this bill. And I really don't believe that having 1 delinquent $70 bill from 6 years ago would lower my score by 55 points. It's just not making any sense to me
     
    #3 lucky8, Apr 4, 2011
    Last edited: Apr 4, 2011
  4. lucky8

    Gold Member

    Joined:
    Oct 30, 2006
    Messages:
    3,716
    Likes Received:
    17
    Gender:
    Male
    Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies. This law is known as the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer's credit report for 7.5 years. The clock starts approximately 180 days after the date of first delinquency on the account. To learn when an account will be removed by the credit reporting agencies (TransUnion, Equifax, and Experian and others), add 7.5 years to the date of first delinquency. Subsequent activity, such as resolving the debt, is irrelevant to the seven-year rule. However, if the debt is a tax lien, that can appear for seven years from the date of payment. A bankruptcy will appear for ten years from the date of the final order. Delinquent federal student loans can be reported indefinitely, i.e., for as long as they are delinquent.


    I'm not trying to argue with you, just trying to understand the non-transparent nature of credit reporting.The above specifically states that after 7 yrs and 180 days from original date of delinquency, anything in collections must be removed from my credit report. I am reading this wrong?
     
  5. monel

    Gold Member

    Joined:
    Aug 23, 2007
    Messages:
    1,687
    Likes Received:
    4
    Gender:
    Male
    If you pay it it will not show as delinquent. It will show as having been 120+ days late but has since been paid. The 7 years runs from when the matter was resolved. For example if you once paid a credit card bill 30 days late then it will show on your report for up to 7 years. But if you had an outstanding balance on your credit card it will continue to show as a current delinquency until it is resolved at which time it will remain on your report for 7 years. Similarly if you filed for bankruptcy it will show for 7 years after the filing. These items do not get removed from your report however. It is just that your score does not take into account items that are that old and lenders rarely look back that far. As it stands, your cable bill, being unpaid, shows as a current delinquency and therefore a current debt. However, I do not believe that it is having such an impact on your score. What you need to do is obtain a credit report from each of the 3 reporting agencies. That will give you your scores and show you any negative items on your report. Then you can address those that need to be addressed. I am not sure where you are located but most States allow you to obtain a free report from the 3 reporting agencies at least once a year.
     
  6. monel

    Gold Member

    Joined:
    Aug 23, 2007
    Messages:
    1,687
    Likes Received:
    4
    Gender:
    Male
    If FCRA says that that is when the negative item is removed from your credit report then that's it. I have a different understanding, though I will not say that I am 100% correct. You still should obtain copies of your credit reports to see exactly what might be on them and take whatever action is necessary to resolve them.
     
  7. lucky8

    Gold Member

    Joined:
    Oct 30, 2006
    Messages:
    3,716
    Likes Received:
    17
    Gender:
    Male
    I appreciate your input man
     
  8. whitestar16

    whitestar16 New Member

    Joined:
    Apr 7, 2006
    Messages:
    133
    Albums:
    1
    Likes Received:
    1
    Gender:
    Male
    Location:
    PA
    My suggestion would be to contact the debt collection company and offer to pay it in full in exchange for removing the collection account (Remove, not show a paid collection). Often times, they'll do it, since they're not settling and you're agreeing to (usually) pay on the spot. If they refuse to do this, it's honestly not worth paying. As the collection account ages, it will slowly hurt less until removed, whereas the fresh paid collection will cause point loss.

    Just as has been said the nature of how credit scoring works is difficult, but removing derogatory accounts will certainly improve your scores.
     
  9. D_Martin van Burden

    D_Martin van Burden Account Disabled

    Joined:
    Oct 6, 2002
    Messages:
    3,365
    Likes Received:
    6
    Something to think about...

    Since the economic downturn in the US, credit is becoming increasingly stringent and hard to come by. I'm willing to bet part of the increased attention to fair lending has come from creditors' efforts to cut their losses. That said, anything, anything that can be used to put negative attention on borrowers instead of lenders will be exercised in their interest. Suffice to say, the bill that's reported as delinquent from way back when is albeit a weak but necessary pawn that they'll play.

    Like others have said before, you just have to call the credit bureau reporting this issue directly and ask what you can do to have it removed from your record.
     
  10. VeeP

    Gold Member

    Joined:
    Sep 3, 2005
    Messages:
    1,787
    Albums:
    1
    Likes Received:
    2
    Gender:
    Male
    This. I've only ever had one issue and was strongly advised to always exchange PAYOFF for REMOVAL if at all possible. In my experience it doesn't even have to be the full amount they're attempting to collect, and be sure to get the terms of the agreement in writing. Many debt collectors are shiftier than the worst used car salesmen.
     
    #10 VeeP, Apr 5, 2011
    Last edited: Apr 5, 2011
Draft saved Draft deleted