So, several years ago I went through an unbelievably ugly divorce, and I was laid off in the middle of it. Long story short, I foolishly chose paying child support and eating over paying my bills About a year later I started paying off the outstanding debt, and pretty much got everything paid off or settled. At the low point about 4 years ago my FICO score was 520 (it might have gone lower, I'm only going by what it was the time I checked). Fast forward to now, when my wife and I are applying for a mortgage. I found out my FICO score was now 687, and that there were a couple of things I needed to take care of. One (the largest at over $6000) I had already paid off back in 2006. Thankfully the agency was decent about it and was willing to fax me a letter immediately as well as doing what they needed to to get it corrected. The next three were tougher. Two of them were from wireless companies, and the collections companies had them listed as "factoring companies" and "open" so the debt would not age. I do not think they were my debts, but was forced to pay them anyway because I don't have the time to wait for the dispute I'd have to do. Both, once paid, agreed to immediately fax me letters saying they were paid off. The last was for a $30 debt. I had what I feel is proof that I had paid it and close the account, but they insisted I owed more. Again, I didn't have time for a dispute, so I was willing to just pay it. However, the representative I had on the phone refused to provide me with any kind of immediate proof that I paid it. He said I had to wait 60 days for it to trigger a letter. After several minutes of "how can we make this happen" discussion, I realized he was not going to help, so I asked for his manager, only to be hung up on. I called back the next day and spoke to somebody else. Being reasonable and nice (and not paying until I got agreement to provide me proof) was the way to go. It took no more than 30 seconds to find out how I could get what I needed. I just had to provide them with a fax promising not to dispute the credit card payment. I suppose I should get to my question for those of you I haven't put to sleep already. The mortgage company is doing a credit rescore to see if my credit hits 700 (basically going up 13 points). Has anybody done this. I'm wondering if the major debt being changed to being paid since 2006 and the other three being paid off will raise my score by 13 points.
Unless you negotiated removal of these negative marks altogether, the changes probably won't have the type of positive effect you're hoping for. A "paid" charge off or collection hurts your credit scores just as much as an "unpaid" charge off or collection. 13 points isn't very much though, so who knows...maybe you'll get lucky!
Josh is correct in saying that a paid charge off is basically the same as a non-paid charge off. That being said..when I was paying off my bad debt...each time I payed a charge off, nothing happened. BUT...when I finally got them all payed off, and had nothing else delinquent...my credit scores jumped over 50 points... So if you have the money to pay ALL of them down...it will greatly improve your credit score. Hope this helps.
Im also into credit scores, but I always don't think about it too much. It would make feel down. I cleared all my debts, all of a sudden my score jumped so high.
I agree with Josh, Depending on how old these collection accounts are, paying the old collection without getting an agreement to have it completely removed from your credit report will hurt your score. CA will update the paid status for that account and it will refresh the last date of activity to the month that the collection was paid. If the collection is a couple years old this could negatively impact your credit score. It is basically refreshing a old negative item on your credit report. If you are only looking for 13 points. I would find a family member or friend that would be willing to add you as an authorized user to one of their existing credit card accounts. Once the credit card account has reported on your credit report you should see a increase in your credit score. Just make sure that the credit card has at least 2 years of perfect payment history and can maintain a low balance (10% of the credit limit). If you have some credit cards already, make sure the payment history is longer then what you have already established. I hope this helps you get approved for your mortgage loan. Thanks! Heather with BoostMyScore.NET
Way to hang in there, I dream of getting my score back into the 600's! It does suck that we don't get rewarded for paying in full. Pay for delete when you can , pay in full otherwise. While some fixes won't help your score, when your CR is being reviewed for a job or other reason, being able to show them that debts are paid in full (at least ) makes a positive impression.
