Author Topic: Stupid Credit Score Question  (Read 2559 times)

trailrated

  • Handlebar Stache
  • *****
  • Posts: 1136
  • Age: 32
  • Location: Bay Area Ca
  • a smooth sea never made a skilled sailor
Stupid Credit Score Question
« on: October 01, 2014, 11:18:38 AM »
Back in 2009 I owed roughly $800 on a credit card and had a dispute with the bank it was issued through. Through a mistake they made, it ended up costing me about the same amount so I refused to pay it. After a while the debt was sold to collections, anyone that called I promptly told to go f themselves.

Now that I have turned the page and become more fiscally responsible and care about my credit score I have some questions for the MMM community. My credit score is currently just under 700.

Do I:
A: Get a hold of the collections company and pay it in full today
B: Get a hold of the credit bureaus and dispute the debt
C: Do nothing, I don't need a good credit score till I purchase a house...which will be more than 7 years after it showed up on my report anyways so it is my understanding it will disappear from the report completely by then.

nereo

  • Senior Mustachian
  • ********
  • Posts: 10767
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: Stupid Credit Score Question
« Reply #1 on: October 01, 2014, 11:27:03 AM »
Back in 2009 I owed roughly $800 on a credit card and had a dispute with the bank it was issued through. Through a mistake they made, it ended up costing me about the same amount so I refused to pay it. After a while the debt was sold to collections, anyone that called I promptly told to go f themselves.

Now that I have turned the page and become more fiscally responsible and care about my credit score I have some questions for the MMM community. My credit score is currently just under 700.

Do I:
A: Get a hold of the collections company and pay it in full today
B: Get a hold of the credit bureaus and dispute the debt
C: Do nothing, I don't need a good credit score till I purchase a house...which will be more than 7 years after it showed up on my report anyways so it is my understanding it will disappear from the report completely by then.

I'd start with B - always dispute erroneous charges.  However, since it is 4+ years old it may be very difficult to change at this stage.  Which leads you to "A" - but here i'd bargain too - call up whomever now 'owns' that debt and see what they would accept to close it out.  They buy your debt from the cc company for a fraction of what it's worth, so you might be able to settle it for less than what they say you owe.

unfortunately, credit scores wind up being more important nowadays than simply when you take out a loan.  Employers are using credit scores (justly or not), and landlords and rental companies now do credit checks to see if you are a risk.
Also, as I understand it, as long as the debt is still on your record it continues to hurt your score.  It's only after it's paid off that it will gradually go away (typically after 7 years).

marblejane

  • Bristles
  • ***
  • Posts: 357
  • Location: SF Bay Area
Re: Stupid Credit Score Question
« Reply #2 on: October 01, 2014, 11:33:15 AM »
First step is getting your annual free copy of your credit report from all 3 credit bureaus. Then you can see exactly what the age of the dispute is and when it should fall off your report.

Did you formally dispute the charge with the bank? Do you have good records of this dispute? If so, then you can try disputing the derogatory credit mark with the credit bureaus directly. Here's a good article on how to do so: http://www.creditsesame.com/blog/becoming-your-own-credit-repair-specialist/

However, if the issue is that you never properly followed through on the bank's dispute process, then it is probably not worthwhile to try to dispute it with the credit bureaus.

Regarding paying the debt back, I would be cautious of doing this. You can open the door for the bank to start pursuing you again if you make a payment on an old debt (here's a good article on this topic: http://www.creditcards.com/credit-card-news/credit-card-state-statute-limitations-1282.php). I would probably just let it age off unless you really feel the need to improve your credit score quickly.


gimp

  • Handlebar Stache
  • *****
  • Posts: 2348
Re: Stupid Credit Score Question
« Reply #3 on: October 01, 2014, 12:36:13 PM »
Also, if you paid it off at this point, it's quite likely that the current owner of the debt would take your money, not mark it paid, and sell the debt to someone else. "But I already paid!" "No you didn't, fuck you, pay me." And the cycle begins anew.

frugaliknowit

  • Handlebar Stache
  • *****
  • Posts: 1671
Re: Stupid Credit Score Question
« Reply #4 on: October 01, 2014, 01:31:34 PM »
If you end up paying it off, make sure you have a written agreement saying the item will be REMOVED from your credit report.  Otherwise, why bother, it will still ding you badly.