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
Angel Morris
this right here
Christian Nelson
A debt will no longer affect your score in 7 years. Basically falls off the calculations. So in 5 years, it'll go away. In any case its $300. That's chump change and will only give you 10 points. Its not going to do jack shit. The only thing credit score gives you is a better loan from the bank. Here's what you do to build credit, get a credit card, any credit card as long as there is no yearly fee to have it. Buy food, gas, anything with it like normal in the first three months and make sure to pay it all off as soon as you can. Then stop using it. Repeat cycle. Bam, credit score is now in the upper 600 range. Fuck that $300.
Elijah Stewart
I got a Chase Sapphire Preferred credit card and am planning on charging everything to it and paying it off in full by the end of the month. Like $4000 in 3 months (which gets me 60,000 bonus points or about $800 in travel). How much would this raise my score from 650? And how long would it take to raise it?
Joseph Wilson
Just make your payments on time and don't open a bunch of credit cards and it'll go up over time.
Eli Wright
It will raise it probably by 1 probably a max of 5 points.
Ryan Miller
what he said!!! I was in debt for years, my attitude was "I owe you this much money? well I do NOT have it!" but one day i decided to be responsible and talked with the loan administrators. Agreed on a monthly payment, and kept up. Next thing I knew, I was at over 750 in the credit scale. just make an effort to care dude!
Christian Reyes
>spending 4k to get 800 travelbux And you are wonder why you are in this position of financial mismanagement? kek
Pic for attention. I've worked in debt collection for several years.
$300 is pretty much a waste of everyones time to collect. Paying someone to chase you, send letters and shit will quickly cost them more than the debt is worth.
First off, ring them. Tell them you've seen the debt on your credit score BUT DO NOT ACKNOWLEDGE THAT THE DEBT IS YOURS! Tell them you have no history with AT&T, ask them to remove the debt and update your credit score.
If they refuse, ask them to provide you with proof of the debt. You want a copy of the contract with your signature on it from AT&T as you are worried someone took out a contract in your name without your approval. You want copies of ALL correspondence sent to you regarding the debt, including any legal notices and definitely including any letters that advise of the impact on your credit score.
This will cost them more money to chase. They have to go back to AT&T for the information, AT&T need to go back to them etc.
If they do all this, offer then $70 bucks to make it go away but DO NOT ADMIT LIABILITY FOR THE DEBT!
Essentially after chasing you for 7 years they have to clean your slate. If you acknowledge the debt is yours, that 7 years starts again.
Rent and utilities, bro. I'd pay off the balance in full.
Landon Evans
Thanks. You mean to "make it go away" it would be off my credit report? It wouldn't show "paid debt in full"?
Christopher Adams
You don't acknowledge the debt, but you don't have the time and energy to escalate it through a formal complaint and letters to your congressman. It was probably your ex at the time, you shared a house with them. Anyway, rather than open up old wounds I'll give them a token payment in return for clearing your credit history of a debt you shouldn't have on your record.
Juan Murphy
Does there have to be a written agreement that they'll follow this token payment and take it off my record?
Caleb Cruz
You will definitely ask for a letter to confirm that your credit history has been cleared.
There are three types of debt collection departments.
1) Operated by your bank/creditor. They will try to collect the money, but they always have their eye on the bottom line. If it costs more money to collect on, they'll waive the debt.
2) Outsourced from your bank/credit provider. The bank has had no success in getting you to repay the debt, so they will outsource the job to a professional debt collections agency. They have more tools at their disposal to track "skips".
3) The debt collector has bought the debt from the bank/creditor. They've paid 12c per $1 for your debt, and now own it. Your creditor has likely already written off the bad debt as a net loss. They are working on the law over averages. There is a strong liklihood that they cannot collect on the debt that they own, however they are also well aware that it's costing them money to chase you. They are also likely to settle quickly, and less likely to want to go back to the financial institution looking for documents, and if they do it is more likely that they will encourage the creditor to buy back the debt so that it can be written off on both books rather than have to pay someone to trawl through 10 years worth of paper contracts and archived correspondence. After all, we're not talking $20k here. $300 quickly becomes uneconomical to pursue.
Camden Harris
This is the way to go about it. Good luck OP.
Incidentally, anyone here mucking around with synthetics?
