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I recently found a medical debt that I was unaware of from 4 years ago on my credit report. I found out the agency that it was in collection with and paid the debt because I knew the debt was valid. Now Im told that I actually did the wrong thing by paying it. That I should have let if "fall" off my credit report in another few years, and now I have "re-opened" the case. Did I do the right thing by paying off my debt in an attempt to better my credit? I will be trying to get a mortgage later this year and I did this hoping to improve my credit situation.
You did fine - make certain you have evidence that it was paid - and forward that to the 3 credit bureaus so that they will see it paid. Send the information certified mail return request receipt. Include a letter to each bureau asking that htey send you verification that the item is showing as paid.
the only thing differant that I would have done is get a letter from the collection agency stating that they will DELETE that entry from your credit reports.
it will probably show payed now- but once in collection blah blah blah.. its still a negative entry.
I am a Realtor and Loan Officer, and trust me that the comment saying you did just fine is absolutely wrong (No offense, Eleanor...). The irony is that you are trying to make good on debt you previously neglected for any number of reasons that are now unimportant (forgot, didn't know, etc.). You pay it, and they update it with CURRENT paid dates. This makes a collection stand out on your report with today's dates, versus years ago when it originally occurred. You either have to play hard ball with the creditor to pay it upon condition they delete it (in writing, which is hard to obtain!), or let it "fall off" your credit report after the time indicated. Most items fall off after 7 years, BK's after 10 nowadays. If the debt isnt too severe, most lenders see it but don't count it as much against you in terms of assessing their risk to loan you money if it is 2 years or older. It doesn't hurt you in their analysis of your report, but it does hurt you because it is pulling your scores down. That's where you either don't qualify for a loan at all, or you qualify with a high, ugly rate. So, who cares about all this advice now that you've paid it, right? #1: Remember this for the future. #2: You can always try initiating disputes and bombarding the agencies (Experian, Transunion, and Equifax) with letters regarding the item. They are obligated by law to "investigate" with the credit and give you an answer within 30 days or remove the item. The idea is (especially if it sticks long enough for you to get through your home loan) for them to not respond to you in time - if they ever answer at all for being so busy - and the item is removed WITH your insistent calls and follow-up to the 3 bureaus to remove the item or confirm it has been removed. Sometimes it eventually comes back on, but it's your closest FREE attempt at a quick-fix. Guess what? This is what most credit repair companies do when you give them your business. They figure it will take months for the info to come back on your report if the creditor ever catches it, plus it will be years before you check your own report again and even come back to them complaining that the item didn't get permanently deleted. By that time, they will give you a bunch of BS (what I like to call "non-answers"), or they will show you the fine print in your contract with them where their results are only guaranteed for 12 months, etc., or they will simply offer no excuses and frustrate the hell out of you. So....try doing it yourself and see if it gets you thru your close of escrow. good luck!
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