Paying off collection accounts in no way improves your credit and may, under certain circumstances, HARM it by lowering your scores. Once an account goes into default, it is a derogatory mark against your credit. The derogatory nature, PLUS the "date last reported" combine to cause deductions to the score, even if the account has been paid off. If the date last reported falls within the past 12 months, the deduction can be huge. In the simpliest terms, ais a history of how you have managed debt in the past. So, obviously, the recent past (last 12 months) has the most impact on your scores. Any derogatory mark falling within that time frame is a "score killer". This is the reason that paying off old collection accounts don't help your credit. They often cause the account to (confusingly) appear to be more recent. The only true way to improve your credit is to pay a collection account in exchange for its' REMOVAL from your credit. Unfortunately, this is not easily accomplished. However it is still worth the effort because that is the only way to actually improve your credit by paying defaulted debts.
If the payments are not suitable in size to the creditor, then yes. This commonly happens with medical bills. Hospitals and clinics are not required to extend the courtesy of credit to anyone. Payment in full tends to be the policy. If you owe thousands and are only paying a small amount (like 50 every month) they will send it to collections.
The lender has the right to receive all the payments. A co-buyer has no rights TO the payments.The co-buyer is equally responsible for making the payments.The lender has the right to receive all the payments. A co-buyer has no rights TO the payments.The co-buyer is equally responsible for making the payments.The lender has the right to receive all the payments. A co-buyer has no rights TO the payments.The co-buyer is equally responsible for making the payments.The lender has the right to receive all the payments. A co-buyer has no rights TO the payments.The co-buyer is equally responsible for making the payments.
Consistent payments will raise your FICO faster than payoffs. Banks don't like it when you pay off the ballances in full because they are not making any money when you do that. Folks that pay off their credit cards every month are essentially getting a free 30-day float, which does not help their FICO as much as maintaining a balance and making payments on it. The previous answer applies to making payments on a positive, revolving, account like a credit card. It is not a good answer the question posed, namely: Does paying off a collection account or making payments raise your score quicker? Paying off derogatory accounts does nothing to improve your credit score and can, under certain circumstances, lower your score. The reason this happens is that paying off a defaulted account updates the account to NOW. The NOW causes the scoring software to calculate the account as a default that just occurred, instead of something you are trying to "clean up". This hits the score in the History category, which accounts for up to 35% of the total. Once any account goes into default, the entire balance is due and payable in full. If a creditor chooses to take payments, they do so at their own discretion. Payments at this point does nothing to improve the situation, except make the outlay of funds easier to bear. So, neither action improves your score. If you want to raise your credit score, you need to look to other activities.
YES! Unfortunate, but true. If the company has had your file for the max time, even if you are making payments, they can still send it to collections. I know this from several past experiences. I would tell them that I will pay $5 a month and you have to take it. Yes, they have to accept the money, but if the payment plan isn't good enough for them they will send your records to a collectionsl PLEASE NOTE, this may vary from state to state, so don't take this as a for sure, but I know of several states that do this.
If you co-signed on a debt, you are not obligated. If that person stops making payments, you have no option other than to make the payments yourself. If you do not, you would be responsible for the debt. It will probably be sent to collections, which will destroy your credit, and eventually will probably lead to a lawsuit, so you're going to pay it one way or the other.
Start off first by getting a Sears, Target, Circuit City or similar in-store credit card. After making purchases and payments on that for six months, you should become eligible for small limit credit cards. Keep making purchases and payments on all credit and shortly you will have established a ground credit. DO NOT GO OVER LIMITS, MISS PAYMENTS, OR INQUIRE INTO TOO MANY CREDIT ACCOUNTS.
Yes. They must be able to pay the loan if the primary borrower stops making their payments.Yes. They must be able to pay the loan if the primary borrower stops making their payments.Yes. They must be able to pay the loan if the primary borrower stops making their payments.Yes. They must be able to pay the loan if the primary borrower stops making their payments.
Personally speaking, it is better to settle with a collection agency rather than making monthly payments. Theres only one ceveat....you must pay the collection agency in full. Example, lets say you owe $1000 to a credit card company. A collection agency will say, pay $600 NOW and this will settle the balance. So, if you dont have $600, its a 'catch-22'. You are better off making the monthly payments until the $1000 is paid.
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