MsWhatsit, your credit score may or may not affect your rental prospects (there are some places that would reject you, but many will not), but it’s possible you might eventually want to buy a house, a car, or some other large purchase where your credit score is going to have major impact. You will thank yourself later if you clean it up now.
Here’s how:
Contact the original creditor. Make absolutely sure you get it in writing from whoever you talk to (faxes will do) that they will actually remove all record of the collection from your report as soon as you pay it. Otherwise, it will still show up as an account that went into collection, and the status will just go from unpaid to paid. Guess what?!? Your credit score will be just as bad! Paid or unpaid, that collection report knocks at least 100 points off your score, regardless. And yes, the creditor can take it off. Their authorization is necessary. If someone you talk to says they can’t do it, then ask to talk to someone who can. Tell them you know it won’t help your credit report to just pay the bill if the collection notice stands. Stick to your guns, because this is the truth. It will not help your score if you just pay it, and the collection notice just changes to paid. You can always pay the bill a couple of weeks later, and meanwhile, that gives you the chance to call back a few times and get someone a.) intelligent b.)with the authority to make the agreement. Remember that the collection agency can’t make it go away without OK from the original creditor, so make sure you get things in writing from them.
Background, and credit report horror story with Educational and Illuminating Moral:
The husband had a collection notice on his credit report. Actually, it was a doctor’s office that screwed up and never billed him for one visit for some reason. Then, they sent it to a collection agency before they ever contacted him. Meanwhile, he’s been there several times more, and paid literally thousands of dollars to them, no problems. The bill in question was for $59.00. Go figure. There’s more; it turns out the whole thing was probably a mistake on their part, but enough for now.
Anyway, said collection report sat there on his credit record for a couple years, unbeknowst to him, because hewas never contacted by anyone. Found out about it last August, when applying for a loan, and was knocked for a loop by the rates offered. His record is sterling except for that one glitch. So, he calls the medical practice billing office, the woman on the other end promises she’ll remove the collection if he pays the $59 plus an extra $30 in interest. He does. The collection never gets removed. Just goes from “unpaid” to “paid.” His credit score remains exactly the same. After innumerable calls to credit reporting agency, collection agency, and back again to the medical practice, it becomes firmly established that yes, indeed, the medical practice billing could remove the collection notice with one simple “OK”, but they won’t. It’s not their “policy.” They promised they would? Oh, can we prove it with something in writing? No? Too bad.
There it would end, with the husband having to pay interest on a secured loan at a rate higher than all his credit cards; except he got mad. He wrote them a long letter, outlining the entire history, in full detail, and insisting they provide documentation of the original bill. He also pointed out that an oral contract is still a contract, and he had been promised that the collection would be removed, for consideration of immediate payment. Small claims court was mentioned in thoughtful, appreciative terms. He sent it to them certified mail. Finally, he got a reply letter from billing; OK, they’ll make an exception. Just this once. Meanwhile, after finally checking records on our end, we now think what really happened is the whole thing was a billing error; they couldn’t find any documentation for the bill on their end, but still didn’t want to give back the payment or admit they made a mistake. So, the collection is finally off his report, and his credit score is now in the happy land of “please, won’t you let us loan you money?” It only took 8 months. He’s still out the $89.00 extortion payment; that’s relatively insignificant compared to all the time and intense annoyance extensive dealings with mindless bureaucracy entails. The moral: if only he’d gotten that initial agreement in writing. Sure, there was one woman in that billing department who clearly enjoyed playing teapot tyrant, but more than anything else, they want the money. Husband gave them the chance to make his life miserable for a little while, by taking their word, and paying up front. That’s how they treated somone who was innocently on the receiving end of their billing mistake. Just imagine how they’ll treat you if you give them the chance. Just also remember, much as they’d love to torment you into shrieking eternity, they’d rather have the money, and will reluctantly release their taloned hold if that’s the only way they’ll get paid.
Getting the collection notice off should result in a remarkable improvement in your credit score’s health. The 90-day late thing isn’t good, but doesn’t have the disaster impact just one collection report has. Think of the former as a zit, and the latter as a massive, malignant facial tumor. I think you can get rid of it by cancelling the card, though you may have to call the credit report people a couple of times to remind them to remove mention of the card. I’m not sure on that one, never having personally witnessed that process.
More information about credit reporting and credit scores:
https://www.eloan.com/myeloan/creditfaq?sid=Jr6EpQJ3T0YAItTpAXDYlW-pIXU
http://www.creditscoring.com/pages/actualuse.htm
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