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TDW163
LSU Fan
Haughton
Member since Nov 2017
13 posts

Help With Credit - At A Loss
In early 2015 I was laid off, got behind on my bills and my credit took a hit. Since then I have been perfect with paying on time and I've been watching my credit. I finally got back up to Almost 700. Portfolio Recovery called me months ago with 2 old accounts from Capital One totaling nearly $1,000. Without knowing any better I set up a payment plan because they weren't reporting it yet and I've paid it down to roughly $300. I've since researched and found that I should have just ignored them since they will not do a pay for delete. It showed up on my credit report about 2 months ago and my score didn't really take much of a hit for some reason. Well my wife and I were getting ready to try to buy a house and so I disputed the collection hoping they wouldn't respond and it would just fall off(dumb). When they confirmed it as being accurate my score fell nearly 80 points. Why is that and can I do anything about it? I've been desperately trying to get my score back up asap because we found a great deal on our dream home and I've come across some conflicting info on collections. Should I pay these off so it shows a 0 balance or cancel my auto draft and ignore them? I was set on ignoring it but have come across info saying some score calculators like FICO9 actually score you better if your collection balance is 0. I've seen that some lenders are starting to go by similar scoring methods. Sorry for the long post. I'm at a loss about what I should do.

Btw Credit Karma says I currently have a 615 Transunion score and my lender is telling me he can approve me at 640. Any help is greatly appreciated.


TDW163
LSU Fan
Haughton
Member since Nov 2017
13 posts

re: Help With Credit - At A Loss
I ordered myFICO scores and the ones that are considered for home lending are:
TU - 602
EQ - 631
EX - 604

I'm assuming I would have been good to go on this mortgage had this collection not been reported. This is so frustrating.

Unfortunately I think Portfolio Recovery may have covered their bases so there is nothing I know to do. I thought they said they would keep it off my report if I paid but after reading about them I'm sure they just said something to deceive me. They seem to be the hardest company to deal with when it comes to deleting.


.


SilverStallion
Houston Astros Fan
Member since Aug 2017
1999 posts

re: Help With Credit - At A Loss
with those scores, i would hold off on the home buying but thats just me. you will get bad interest rates. the collection account will be on your report for 7 years.

as a last resort, if you pay it off, i would call capital one's president office and plead your case about what happened. portfolio and regular customer service will lie to you and tell you they cant remove it, but capital one definitely can remove it.
This post was edited on 11/26 at 5:53 pm


foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
37820 posts

re: Help With Credit - At A Loss
quote:

with those scores, i would hold off on the home buying but thats just me


Me too.

Anyone who is in a position to make a 15 or 30 year commitment to pay a mortgage should have been able to pay an old $1000 debt without a care in the world. A debt that size is chump change.

A better approach would have been to ignore the debt consolidator. Should have called up Capitol One and said "Hey look, I can send you a check today for the full amount if you won't report it as late." They would have jumped at it because their alternative was to sell the debt to a collector for a couple hundred.

If you can't write a check *today* for a thousand dollars to settle an outstanding debt, you need to rent, not mortgage.


GEAUXT
USA Fan
Member since Nov 2007
22860 posts

re: Help With Credit - At A Loss
quote:

Anyone who is in a position to make a 15 or 30 year commitment to pay a mortgage should have been able to pay an old $1000 debt without a care in the world. A debt that size is chump change.

A better approach would have been to ignore the debt consolidator. Should have called up Capitol One and said "Hey look, I can send you a check today for the full amount if you won't report it as late." They would have jumped at it because their alternative was to sell the debt to a collector for a couple hundred.

If you can't write a check *today* for a thousand dollars to settle an outstanding debt, you need to rent, not mortgage.



Very true, and very well said


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TDW163
LSU Fan
Haughton
Member since Nov 2017
13 posts

re: Help With Credit - At A Loss
I'm not going to buy with this credit score. It was around 700 literally last week when I decided to get pre-approved. I was under the understanding that if I made payments that it would stay off my credit. They fooled me. I'm trying to figure out the best way to handle this collection. There is a lot of conflicting info out there and I've found that the majority of people have no idea about credit.

I left out plenty of info in OP but I should have paid it all then. I easily could have paid in full and have since offered to pay it in full for a delete but they wouldn't do it. I have been saving for a down payment for a house and figured I'd hold the $1,000, while paying under $200/month on it, in case I found a house I liked since every bit helps. Ended up being the wrong decision.

When I got laid off, my wife was still in school. She has been working and making a pretty good income for 2 years now and we can pretty much pay all of our bills with just her income. If I ever did get laid off again, I could make it on a much smaller salary due to her having an income instead of costing extra money for school.

Looking back, I wish I would have called Capital One but I didn't know any better and the collection agency said they could settle for less money. I have since done a ton of research on credit and even though I have built my credit well over 100pts in a little over 2 years(until this recent issue), I still was doing a lot wrong.

We have been paying $1,500/month for our rent house for over 2 years, both have newer nice vehicles, go on vacations often and have still had plenty of extra money to save for a significant down payment. Paying the mortgage won't be an issue.

Please don't take anything as bragging. I'm obviously embarrassed about the situation or I wouldn't be using an alter. I just want people to understand the situation and hope to get the best advice possible from people who actually deeply understand credit. I've learned that credit isn't as cut and dry as just making payments on time. Especially once you've had any negatives at all. Thanks for all the help.


Teddy Ruxpin
LSU Fan
Austin, TX
Member since Oct 2006
31375 posts

re: Help With Credit - At A Loss
Is your wife able to qualify for the mortgage by herself?


TDW163
LSU Fan
Haughton
Member since Nov 2017
13 posts

re: Help With Credit - At A Loss
I don't think so. She would be pretty close but I don't think she is quite there. I make a little more than twice as much as she does. We plan on living in this house for a minimum of 10-15 years so we want to get a house with plenty of room to grow our family. We already have 1 kid and want at least 1 more.
I know some will say we are trying to buy too much house. Those that know our finances wouldn't though. This house is more than $200k less than what the lender says we can afford based on debt to income ratio. It is a pretty nice house but the past has taught us to not over extend ourselves.
I'm at a job with very good stability now but could easily survive with a temporary $15/hr job if something happened here. She is an RN so her job stability is very good.
I'm dealing with a guy at a bank who seems to really be going out of his way to get us approved. I know that is his job but once he saw how all this happened and looked at our finances, he's been going above and beyond. Hopefully we can get it done. In the meantime, I'm doing as much research and seeking as much advice as possible.


Mingo Was His NameO
LSU Fan
318
Member since Mar 2016
3795 posts

re: Help With Credit - At A Loss
quote:

I make a little more than twice as much as she does.


You say this, but you also say she makes decent money as an RN. Honestly, it sounds like things aren't adding up. Why would you not just pay $1,000 if you are making $150-200k a year combined? Maybe I'm just not getting the full picture, but I have a hard time believing you could go from over $200k combined income to about 50k combined income and be fine with the other things you've said in here.

I'm not just trying to call you out; I say all this because it seems you may not be financially responsible. That very well may not be your fault, and you are trying to educate yourself it looks like. I would really try to hold off and save some more money before you bought a house for multiple reasons, your credit problem only being one.


TDW163
LSU Fan
Haughton
Member since Nov 2017
13 posts

re: Help With Credit - At A Loss
Looking back I should have paid it right then. As I said before, I was looking to buy a house and was going to use that thousand, along with other money we have saved, as a down payment. I promise I had plenty of money to do it but figured I wouldn't even notice the small amount autodrafted from my account for 6 months and would rather pay as much towards principle on the house as possible.

We make a little north of $160k household. With the bills we have now and the bills we would have with this house, we would be fine with her income plus pretty much any temporary job I could get.

Buying this house would not change our bills much at all. Maybe $200/month. We already both put 15% in our 401k plus have been putting money in savings. As I said before, we aren't living outside our means at all. I have been very good with my credit(increased over 100pts) for over 2 years and she has never had a negative on hers.

I may have left this out but the collection came up a few months ago but it wasn't on my credit and they led me to believe that it wouldn't be on there if I set up a payment plan. It just showed up on my credit and for some reason didn't hurt it much until I disputed it. I disputed it because I thought we agreed that it wouldn't ever hit my credit. Had I never disputed it, I wouldn't be in this predicament. Collectors are very deceiving and that's putting it nicely. I'm kicking myself for not just paying it right then but thought it would be better to spend every bit available on a down payment.

ETA - From my research of Portfolio Recovery, this would be on my credit report even if I paid it in full right then. They report everything and will not budge on it. I still should have paid it off right then though.
This post was edited on 11/26 at 10:01 pm


Mingo Was His NameO
LSU Fan
318
Member since Mar 2016
3795 posts

re: Help With Credit - At A Loss
Assuming that's all correct, does your wife have a credit card or any debts in here name? Within 6 months of having my first credit card my score was in the 730 range. You may want to look into getting the mortgage in her name if it's that important to you to buy right now. There isn't much you can do to fix your score besides plead with the collector. If that doesnt work then building your wife's credit is going to be the quickest way to buy. If that's the case then get a credit card in her name and put 30-40% of the limit on the card and pay it off in full monthly and her score should shoot up pretty quickly. Before you do that be 100% honest with yourself and decide if you have the discipline to not overspend on the card and not be able to pay it in full each month.


TDW163
LSU Fan
Haughton
Member since Nov 2017
13 posts

re: Help With Credit - At A Loss
She is already in the 700s. With her car note, this house is probably just a little more than she can get approved for. We both have credit cards that we pay off every month and we both have nice vehicles in our names that we have been paying without being late. You don't add over 100pts to your credit score in 2 years without being disciplined. This was an unexpected thing from years ago that is screwing me. I have been good with my money since I learned my lesson nearly 3 years ago.

We can wait 6 months and according to my research and multiple credit simulators, I can get my credit back pretty good and by then. I will have to be very aggressive and use a lot of the credit building strategies I've used to repair my credit already. This house just happens to be a very good deal and it's exactly what we've been looking for so I was hoping to find a way to make it happen.

Everything I'm saying is true. This is an anonymous message board. I have nobody to impress. I have been very financially responsible the last few years and just had bad luck on one thing that was out of my control that caused my score to drop last week.


SilverStallion
Houston Astros Fan
Member since Aug 2017
1999 posts

re: Help With Credit - At A Loss
Somehow I just don't believe your story, and that's ok. "This is an anonymous message board. I have nobody to impress" yet, you're using an alter because you care what people will think about you on an anonymous message board.

Anyways, like other have said, the house buying idea you have isn't a good idea right now. I mean, what positive do you gain from buying? Just keep renting until you can pull your score back up. The collection account isn't going anywhere. That ship has sailed.

You're lying to yourself when you say that the collection was "out of your control." Everyone financially responsible has at least 6 months of bills/mortage/rent/car/etc saved up for circumstances that may arrive, like when you get laid off.

I'm not trying to be a dick, but you're trying to make a situation justifiable when it's not. And I believe you're smart enough know that. Good luck in your endeavors


TDW163
LSU Fan
Haughton
Member since Nov 2017
13 posts

re: Help With Credit - At A Loss
Well I'm using an alter because several people on here know me IRL and my credit past is embarrassing. I've grown up a lot since then.

I will most likely just wait a little longer. This house being such a good deal on exactly what we are looking for is the reason I'm going all out. My credit was truly considered good just a week ago.

It was definitely in my control 3 years ago when I was stupid with my money and lost my job. When I say out of my control, I mean the fact that something from 3 years ago just hurt my credit last week when I've been doing all the right things for a couple of years now. I take full responsibility for my actions back then and have since corrected the way I manage my money.

Everything I'm saying is 100% true. I'm not just some bored troll. I don't troll on TD but if I did it wouldn't be on the money board lol.


Mingo Was His NameO
LSU Fan
318
Member since Mar 2016
3795 posts

re: Help With Credit - At A Loss
quote:

I will most likely just wait a little longer. This house being such a good deal on exactly what we are looking for is the reason I'm going all out. My credit was truly considered good just a week ago.



You'll find another house. It sucks now, but it's really not the end of the world. Take a few months work on your score and keep an eye out for what you're looking for. You'll find a house you look, and you'll be in a better position to buy it.


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SilverStallion
Houston Astros Fan
Member since Aug 2017
1999 posts

re: Help With Credit - At A Loss
If you're this adamant about the house, then do it. I don't think it's a smart move but you only live one life. If buying the house isn't going to break you because of higher interest rates, then do it. Refinance in a few years once your score is back up.


Collection companies don't really give a shite. Once the bank sells them, they have a portion of your money so they don't care anymore. Once it hits collections, they are adamant because when you pay, they make commission. You can settle because Portfolio probably bought the $1000 debt for $200. You could've negotiated and said I'll pay $500. They would most likely say ok and the company makes money plus the agent makes a commission. When people dont pay, they dont make money. Now, the debt won't fall off right away but they legally have to mark your account as paid in full. It'll say something like charge-off; paid in full.


TDW163
LSU Fan
Haughton
Member since Nov 2017
13 posts

re: Help With Credit - At A Loss
I want this house for sure but I'm not going to finance it at a high rate. Like I said before, I am much smarter with my financial decisions than I used to be. My reason for coming here was to see if anyone had a similar experience or knew what I could do to get my credit to what it was just a week ago. I would have already been approved if that didn't come up last week. We can afford this house and all of our bills with much less than our household income. I wasn't coming to ask if I could afford it. Was just looking for advice on the situation. Obviously the collection can't be deleted so I will just wait. Thanks for the replies.


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AmeriKop45
LSU Fan
Coach, Wing Tip Seat
Member since Jan 2016
2096 posts

re: Help With Credit - At A Loss
You owe the $1000. If you have the money, why not just pay it and not try to get out of it? $0 collection balance is definitely much better than having any collection balance.

Paying your existing debt should no question be priority #1. You are saying you were trying to save the $1k to put down on a home instead of paying down that debt? And that too while driving nice cars, vacationing etc? I don't think I understand your situation because if I do then the answer here is quite obvious.
This post was edited on 11/27 at 1:07 pm


TDW163
LSU Fan
Haughton
Member since Nov 2017
13 posts

re: Help With Credit - At A Loss
I called and paid it this morning. I wasn't trying to get out of it. I was trying to get it off my credit report completely. I've been told that a paid collection is pretty much just as bad as an unpaid as far as your credit score goes. In fact, many repair specialist will advise you not to pay it at all and just completely ignore them if they won't delete. I was advised not to pay them without negotiating a delete in exchange. Once a collection is on your CR, it is bad even paid in full.

ETA - The vacationing slowed down this year once we started saving for a house down payment.
This post was edited on 11/27 at 8:34 pm


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TDW163
LSU Fan
Haughton
Member since Nov 2017
13 posts

re: Help With Credit - At A Loss
quote:

Common Myths"If I pay a debt owed in collections, my credit score will increase"

LINK
"Again, no. A paid debt in collections is no better than a debt owed simply because the damage is already done by the negative item showing on your report. The ONLY way to increase your score is to remove the negative item by doing a “pay for delete”. However if you’re going to be making a large purchase, like a house, the lending institution/bank may want to see the debt paid before they will lend monies. Thus a paid debt on your report would be beneficial. Again, the DOLA would be updated, BUT your score would not increase."

This is why I've held off paying in full and have been trying to negotiate a paid in full. They won't do it so I went ahead and paid it off today ONLY because I plan to buy a house in the next year. If I wasn't then I wouldn't pay since it hurts my credit the same for 7 years. I've found that most people don't understand how credit works and think just paying it the best thing to do and that's not always true.


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