Getting points for paying off a bill in collections?

Question

I have a bill that is $724.00 in collections. They told me that they can give me a settlement deal of $543.00. If I take the settlement I will only get half of the points back. I really dont know what that means so Im not sure what to do. I want to buy a house this summer. Is the $180.00 that I would save worth half of the points?

Answer 1

Do you mean FICO score points? Try to settle with the original debtor and see if they'll reflect that on your credit report.

Answer 2

If you take that settlement, get it in writing.

Personally, I think the collection agency is full of it because they are not the ones that give or take away points on your credit score. The credit bureaus figure them out based on what is reported to them in the way of debt, late payments, etc. All the collection agency reports is that the debt was settled.

The collection agency is trying to bully you into paying the higher amount because the more they can get out of you, the more money they make.

Get everything in writing from them before you send them ANY money. You don't want to find out 6 months from now that they are still holding you responsible for that last $180.

Once you have paid it, wait a reasonable amount of time and get a copy of your credit report. That debt is going to stay there for years but it should say that it was settled now. If it still says it's open and you owe money, dispute it.

Answer 3

No, long-term you will end up spending more than the $180 since your score will be lower. The lower the score, the higher interest rates you will be charged. Over a 7 year period (or until the collection comes off your report), that will add up to quite a bit of money, especially with the house loan. Also, your car and home insurance rates can also be higher due to your credit score.

Answer 4

The fact is that all collection agents lie!

The proof here is that he says they will give you half your points back if you pay the bill.

Lie!

First, they have no power to restore points from a negative item.

Second, whether you pay it or not, it's still going to be a negative item. It may show "paid" but will still have derogatory information saying you were in collections. Makes no differance to your credit score. But it MAY make a differance to a mortgage company that actually reads your credit report. But your bad credit score will still hurt your overall loan qualifications.

Therefore, what you want to do is get this REMOVED from your credit history.

Tell the collection agent that in exchange for paying the debt, they must agree IN WRITING to DELETE the entry.

If they tell you the can not do it, or that it's against the law.....well they are lying! duh!

Trust me, there is NOTHING in the law that prevents a collection agent from deleting their own negative information. Anyone wishing to prove me wrong please speak up and produce the proof. That includes the cra agreement also.

So if they won't agree to deleting it, don't pay it. Consult with your mortgage broker to see how much effect it will have on your loan.

Answer 5

Paying the collection account does not improve your score, in fact sometimes it makes it worse. This is because collection accounts only weigh in your score for two years (they stay on the report for 7 years but they don't affect the score past two years) When you pay off a collection account a new report goes into affect showing the collection account satisfied and the two year clock is reset! You still should pay it off, but don't do it just in anticipation of your score improving. Your best bet is to get them to agree to remove the account from your credit report all together and get that promise IN WRITING!!
Good luck!

Answer 6

If you plan to buy a house, you will need to have as good a credit score as possible. You will have to pay this bill, so it is to your bennefit to pay it sooner than later. Before you do pay, though, try to make arrangements with the original creditor for a payoff, and see if they will clear it on your credit report.
I know, sometimes we're 'forced' to pay things we don't agree with, for one reason or another, but if your name is on the debt, there's no way of you getting out of the responsibilty. Another thing. too, is to be frank, and up-front with whomever, you deal with for financing, and perhaps an explanition will help them to understand 'why' you had trouble with that piticular debt.

Answer 7

Hi!
Paying a debt in collections does not help your credit score at all *unless* you get them to remove the record from the report altogether.

Get it in writing...and be warned...they still might not do it.

Have you agreed to anything yet? payment arrangements?
If you have not..don't. By law they are suppose to validate a debt after contacting you via US mail. The debt may not even be in statute..which varies from state to state.

Answer 8

It basically shows paid, and it nevertheless rather hurts your score-- particularly multiple ones. i visit assert, nonetheless, while they are paid you're able to do disputes with all 3 credit bureaus claiming that the sequence companies agreed to delete the account while paid in finished. approximately 50% of the time, you're able to be triumphant and characteristic them deleted even nonetheless they are valid in the event that they are paid-- i assume the companies dont rather care as long as they already have been given their money. it works and it makes a large progression on your score.