According to myFICO.com – FICO® Score 8 ignores small-dollar “nuisance” collection accounts in which the original balance was less than $100.
Question: Hi Lisa! I’ve been reading your blog whilst trying to get my life together! I’m hoping you can help me personally! Here’s my situation. I have 2 accounts in collections…one medical..one from Comcast cable.
I found that these accounts were in collections when I signed up for credit karma. Anyway, I could make the payments in full but when I called the collection agency they both advised that they had a ‘zero deletion policy’. I was going to pay them both and have it marked as ‘paid in full’ but I read that it will actually hurt my score! They said a goodwill letter was also pointless (my own wording). The original Comcast account is from 2013 but it says it’s been open at collections since December 2015 (Comcast didnt report). Collections asked me for documents to support a dispute but I do not have any from 2013! I’m not sure if I should pay it and dispute it with the credit bureaus. I am in the process of trying to buy a car because I need a safe vehicle for my babies.
The other account is only for $69 and while I could pay it, they will not do a pay for deletion. I’m thinking about hiring CreditSaints and cut my budget elsewhere. Please help me!
ANSWER: This may sound counterproductive to your efforts to improve your score; but, I think some collection accounts should be left alone. I say this because paying a collection account will undoubtedly update the “date of last activity.” The “activity” being the payment. Most lenders use FICO 8 scoring model where “paid” and “unpaid” collection accounts hold the same negative weight when it comes to calculating your score for accounts that exceed $100.
But a new ding to your score may occur when the collection agencies update the “date of last activity.” It can end up looking like a new collection account and you don’t want that.
Additionally, the collection account that is reporting an amount under $100 is not being calculated into your FICO score. I wouldn’t waste too much time or effort trying to get a paid for delete with Comcast. Their collection agencies do not like to cooperate because they know they are under no legal requirement to delete legitimate debts. Even though other collection agencies may do it, in the end, it’s a courtesy, not a requirement.
If you really just want the debts removed from your credit reports, you can try paying them. Then dispute with the credit bureaus or try a goodwill letter type of letter. I would say persistence in a goodwill removal is about your best bet but that would mean you would have to pay them first.
For purposes of purchasing a vehicle, most lenders are not going to require that the collection accounts be paid. Plus, you may still get a decent interest rate depending on the shape of your other accounts. If you have a positive credit history with a few dings, having a few older unpaid collections should be okay.