Hi /biz/, total budget n00b here. Been googling everywhere but can't get a straight answer: what's the best way to handle a $300 bill that went into collections two years ago?
Background (no, none of this is an excuse, just context): my mental health took a bad turn a few years back and I stopped paying bills altogether and almost got evicted before I got an intervention. Doing much better now and paying all my bills on time---I have four open accounts and only one of them currently has a balance, the rest are at zero.
Experian gives me a FICOScore 8 of 648. It says the factors affecting my score are no loan activity, a short credit history, too few accounts open, too many hard inquiries (again, something I was really dumb about when trying to learn about all this stuff), and---worst of all---a bill that went to collections. It's $300 from AT&T (now handled by Enhanced Recovery) and was opened in January 2017. I completely forgot about this until I saw it on the report.
This is my first time trying to handle something in collections. I keep seeing conflicting reports on how to pay it off and improve my credit. Settling the debt for something lower will apparently negatively impact my score. Others say paying it off in full apparently won't make too big of a difference because it'll still stay on my credit history. Then I see something about "pay to delete": paying the debt in full and having it deleted off my credit history. I don't know what to make of this.
What's the best and quickest way to pay off this debt and repair the damage done to my credit score? What do I say to the person on the other line---and what DON'T I say? Should I get anything in writing before actually paying?
Equifax has my score as 768 because it's the only one that doesn't have this collections bill on it. Would this reflect what my FICOScore 8 could potentially be if I got rid of this debt? How quickly would my credit score rise if I tried any of the methods above?
fuck I thought this was /biz/, forgive me father I have sinned
Luis Perry
just pay it off you pussy
Christopher Anderson
If it's been in collections for that long, there's not going to be a whole lot you can do about it. But the longer you let it sit the worse it's going to be when you try to get your credit score back up. So what you want to do - you want to call the collections agency and try to talk them down. They bought the debt for pennies on the dollar in all likelihood will be generally willing to negotiate for any amount over that - and that tends to be not very much. See if you can low ball them at like 75 or a hundred, and haggle them up from there. The person that you're talking to your has an incentive to try to talk you up but don't let them bully you. They will try to bully you but it's all just an act at the end of the day. It's good that you're trying to get this addressed but the damage has been done and short of calling the credit reporting agencies themselves and trying to convince them that the debt itself was fraudulent it's going to be there. best you can do is just try to make good on it.
Andrew Garcia
Negotiating a debt down is fun. I stole $70,000 from wells fargo this way. 30k on a 100k loan ahahahahahahahahgxcjrj
Isaiah Long
Isn't it bad to acknowledge the debt in the first place...like you ask them to send a debt validation letter first?
Jackson Clark
Paying it off won't do much good because it'll still be on your credit report. Look up pay for delete template letters you can send where you offer to pay the debt for removal of it off your credit report.
It goes something along the lines of I don't know what this debt is and why it's on my credit report but I want it taken care of so I'll pay it for removal. If you dispute by mail they only have 30 days to respond and if not it'll get removed anyways. Never dispute online as they have more time (60-90 days I believe) to respond.
Michael Brooks
Isn't a debt settled for that low a pretty shitty mark on your credit report?
Brody Mitchell
whatever you do don't go on creditkarma and look at the score they gave you. I also had a 650 but their site gave me a 697 through "VantageScore", which no one pays attention to
