So I have a situation here - a friend of mine who has no credit wants to build her credit now that she's out of college, so I told her to start with a credit report and see where her credit lies.

She ordered a credit report, and to no surprse, its not good - its four or five entries with one write off and some outstanding credit that's been passed off to a few collection agencies, and this is what I have a question about. Apparently she got into some debt in 1998 and its on her report now.

She has listed an original creditor dating back to 1998 of an outstanding amount of $500. That went 180 days past due and was transferred to a collection agency. That amount then accrued interest and was sold to another collection agency at $1,500. That agency ran the total up to about 3,000 as far as I can tell.

Since the debt is so old, will it ever fall off her credit report or will it continue to grow forever? She wants advice and I'm not sure if I should tell her to ignore it as its almost 9 years old or if she should contact the current agency and try and settle the account for $500.

I don't really have any experience with collection agencies or how this would be best for her, so I'm wondering if anyone here can help me out, thanks,

 

I would reccommend this site for a wealth of info:

www.creditboards.com

Read the Newbie FAQs....They will answer a lot of questions.

After a couple of hours of reading the various threads in their 'credit forum', you will learn a great deal.

In fact, if you post this same question over there, you might get some great answers. Just a suggestion.....good luck.

 

As the previous poster suggested, read up on a site like that. But one thing I know she should watch out for- negative items drop off after 7 years right (though I'm not sure what happens when a debt is moved around to various collection agencies).. Anyway, let's say it's been 6.5 years and something is about to drop off, if she all the sudden contacts the collection agency and makes a partial payment, it may re-start the ticker, meaning she has 7 more years of it on her credit.
Though, ethically, she should probably pay any debt that she truly owes. But I'm not going on a soapbox about that

 

Unfortunately it won't go away. I can't remeber the name for this practice of selling off collections and renewing the dates, but it is basically illegal. What is happening is every time the collection is sold off to another agency, that agency is opening it as a "new" collection instead of an old one being transferred. The best bet is to call the current one and offer to settle for a very nominal amount.

Found it, here you go.

Click

Christian

 

I am pretty sure debt is debt, but it can only be reported for 7 years from the account write off, and the statute of limitations on suing for the money in NC is 3 years, regardless of any payments, so its well past that. It looks like a lot of artifical price increases, so I'm wondering if I should tell her to just have the credit reporting agency remove the old stuff or if she should contact the credit agency and tell them to drop it too.

Right now I'm reading up on that site - lots of good info in there.

 

Yes the problem is the credit bureau doesn't research the history of the debt. If it goes on and the creditor lies and said it just happened then the credit bureau 7 year clock starts ticking then.

There is a way to get the bureau to reset the clock to when the bad debt happened but it ain't easy and you have to know what you are doing or the clock starts ticking again.

NEVER EVER pay a collection!!

That doesn't sound right and is contrary to logic and old time accountability for your actions but the creditors got the laws changed so that they could re-ding you with a reset of the 7 year clock when there is any activity so that they could get to you a little more and it has backfired! The best way to handle it now is simply to let some time elapse.

Now most new creditors don't care if you have a collection with an unpaid balace. In mortgages they used to require you to pay them off, but since the re-reporting can drop your credit scores 100 points are more and since they are credit score driven even they have quit asking for you to pay most unpaid collections off. Large amounts ($5,000 or more) can be an exception to that rule.