Mami21 asked:
My credit score is 544, and I have two outstanding debts on my account, one is a medical bill for $380.00 and another is a cell phone bill for $1,025.00. If I paid for my medical bill in whole, how many points do you think that would bring my score up until I am able to make some payments on my cell phone debt?
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My credit score is 544, and I have two outstanding debts on my account, one is a medical bill for $380.00 and another is a cell phone bill for $1,025.00. If I paid for my medical bill in whole, how many points do you think that would bring my score up until I am able to make some payments on my cell phone debt?
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#1 by bdancer222 - December 31st, 2009 at 03:58
Paying off derogatory items will not improve your score unless you get the items deleted from your file. Since both these items are single entry, you can ask for a pay for delete — you pay $x and they delete the item.
You may even be able to settle for less than full balance. If the debt is over 3 years old, offer 25%; 2 or 3 years old, offer 50%; less than 2, offer 75%. Lump sum gets the best deal. Payment plans have to be short term. Get any settlement agreement in writing before you pay anything. Keep the agreement and your payment proof, forever. Do not give collectors direct access to your bank account.
#2 by A.R. - December 31st, 2009 at 06:06
Above poster is 100% correct. I just have a few extra things to add.
If you go for a pay for delete, expect the collection agencies to not want to do it. Keep calling, keep talking to different reps and do it close to the end of the month. They are much more likely to agree to this if its close to the time they have to make their collection quotas. Make sure they fax the agreement to you BEFORE you give them the money. Also make sure that the agreement includes (if you settled) a statement that they agree NOT to sell the remaining balance to any other collection agency. If you don’t, then you are going to discover 6 months down the road a new CA on your credit report, your score plummetting, and a whole new set of CA interest charges and fees to pay. Not fun.
Pay the cell phone debt first, not the medical collection. When lenders pull your credit and actually analyze the entries, medical collections are often not taken into account when tallying up your overall credit worthiness. The cell phone bill will be. Granted, both drop your FICO score, but the cell phone bill is much worse in the long run to someone analying your debt.
If the CAs refuse pay for deletes then dispute both items with the credit reporting agencies as “I do not recognize this item, could you please look into it.” Include a copy of that agency’s credit report and wait. If the CAs do not have enough information on you (and many times they don’t) they will be unable to verify and the tradelines will be removed. I’d attempt this before paying anyone a dime.
Best of luck.