If I pay a collection agency for a 6 year old debt, will it change my credit report?
Question by phillymac78: If I pay a collection agency for a 6 year old debt, will it change my credit report?
I had Verizon Wireless in 2001, and I canceled (I thought I had served my time, but i guess not). So, a few months ago, I get a call from a collection agency, saying that I had a $ 300 early termination fee back in 2001, and they bought it from Verizon (yes, I now hate Verizon).
I haven’t checked my credit score, but I assume that it was reported. So, now the collection agency wants me to pay.
I heard that whether you pay or not, your credit report remains the same. Indeed, the collection agency does NOT use the credit report as a motivation (e.g. “If you pay it will be removed from your credit report.”)
So, should I pay the fee or not?
(*please don’t just give your opinion, I would like a solid answer*)
Best answer:
Answer by worker
Pay 300. Not a big deal and saves you time and lawyer fees to get them to leave you alone.
Add your own answer in the comments!
With any bad debt, it will remain on your credit for 7-10 years. However, if you do pay, the debt will be reported as paid in full (which is a plus for you)but the debt will still remain on your CBR… the sooner you take care of it, the more future creditors will realize you are responsible enough to resolve your debt after financial hardship.
don’t pay it. after 7 years it comes off your credit report. It is a small collection account and not a revolving (credit card etc) account. The impact on your credit is minimal. Do not listen to the collection agency. They probably bought the debt from Verizon for about $ 50 and will try anything to get you to pay more than that.
The other issue is if you were ever properly notified of the debt. They have to send you a bill for the early termination fee. You can dispute the validity of a debt and either pay it if it is valid or it will be removed from your credit report if not valid. I am not sure how to do this, but the credit bureaus can tell you, You are entitled to free copies of your credit report once a year for free (by law). Look in the yellow pages under credit report and you should be able to call them.
Yes, pay it.
When lenders look at your credit report, they will not just look at your credit score, but will also look at your debt to income ratio, current balance to high balance ratio, number of late payments, number of charged off accounts, etc. For example, if your credit card is $ 10,000 and you have $ 9,000 in credit card debt, that’s bad. If you have a car loan that started at $ 15,000 and you’ve paid it down to $ 5,000 remaining balance, that’s better than having a car loan that started at $ 10,000 with a remaining balance of $ 9,000. In fact, one of the worst things you can do before applying for credit/loan (buying a house for example) is to buy a new car using a car loan.
Back to the subject. Pay it off. Lenders will look at your charged off account, which will show up in your credit report and will make a decision to give you credit/loans or not on that data. Ever heard the term: “Once a liar, always a liar”? Same thing with people who don’t pay their debt.
Some states have certain laws that after so many years, lenders cannot come after you. Look it up on the Internet. However, during that time, you must not talk or communicate at all with these lenders. Once they make official communication with you, that time period resets. If you play this game, it can be very risky, including lawsuits and forced judgements/garnishment. Do yourself and your kids a favor and just pay it off.
Go to this website for your free credit report(s) EACH YEAR. If you want the actual FICO score, you must pay a small fee. Do not be fooled by other “free” credit report websites.
http://www.AnnualCreditReport.com
AS debt gets older, its effect on your credit score wanes. You may end up Paying an old debt to have it re-appear as a paid collection, which could stay up to 7 more years!
http://www.californiacreditsolution.com/Analysis.html
My Company’s rule of thumb is dont pay debt over 4-5 years old without a letter confirming they will delete it.
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If you pay, make them clean the credit report in exchange for you paying. Get it in writing before you pay. Look at your credit report before you pay to see if its there, if not tell them to suck wind.
You can use credit repair agency to fix your credit – for example this one – http://freecreditreport.sinfree.net – They can clean lots of bad stuff from your credit report – and do it much faster than yourself, so your credit will go up fast.
You are correct that if it is reported and you pay it, it won’t help your credit at all.
First, I would make sure that it is not reported.
But remember, just because they aren’t reporting it doesn’t mean they can’t come after you in small claims…and a judgment WILL go on your reports.
If it is not reported, send them a modified pay for deletion letter. Instead of paying for deletion, what you want at that point is a pay for non-disclosure agreement. That prevents them from reporting it after you pay them. Yes they are shady enough to do that, and yes, it is legal.
If they aren’t reporting it and they won’t agree to it, ignore them unless and until they either report it or sue you for it.
If they are reporting it, however, dispute it before you do anything else. If they don’t answer it, it is off your reports in 30-45 days.
If they are reporting it and they answer your dispute, send them a pay for deletion letter and se if they take it. If they do, pay it and be done with it. If they don’t, ignore it.