Credit issue that I don't know what to do about it

24 Replies

Hey Everyone,

I'm currently in the process of looking for my first house hack on a duplex or a triplex. I'm planning on getting a FHA loan and are saving up for the down payment and reserves right now. But the thing is I have a 6yr old eviction on my credit report for $4700 which I don't know what to do about it going forward. I been doing alot of research on credit and cant seem to find the right solution. So my questions is

1. Should I call and try to negotiate the debt to pay a lump sum for it? ( also what would be a reasonable amount to start off with the negotiating to offer on that amount of debt?)

2. Should I go with a credit repair person to take care of it being as tho they are more eqipped with the knowledge to negotiate better? (This is the only thing that I actually have on my credit that's in collections)

3. Or should I go with just getting 2 or 3 secure cards  to start building my credit and ignore taking care of the debt (credit score-610)? (Because I have read that if I call to negotiate a old debt then it can become current and affect my credit in a negative being as tho I think its not affecting me now since its 5 yrs old)

I do want it off but Honestly I just don't know how to go about it. Any help would be greatly appreciated and thank you in advance for any suggestions      

Why not pay off the whole 4700? 

Hi James. The ideal solution would be to negotiate a payoff at a reduced amount and have them DELETE the account instead of merely showing as PAID. Otherwise you could take a big hit to your credit score as a result. One way or another it has to go either via deletion or dispute removal.

If you are interested in being a landlord you may want to put some serious thought into paying off your entire debt.

You owe $4700 , you pay $4700. That would be the responsible thing to do. 

  @Thomas S. makes a great point. I think if you are planning to become a landlord ... then you need to start behaving like one. Would really go a long way .. @James O Nix. 

Good luck.

Pay it off for your integrity, but only when it's been 7 years and has fallen off the credit report. 

The problem is that credit scores on charge offs are based on last activity date. So, if it's 6 years old it no longer has such a big effect. BUT, if you make a payment (even if you pay it all)NOW, your last activity date would be NOW and suddenly it looks like a recent charge off and the 7-year clock will start new. 

Paid charge-offs are coded the same as unpaid charge-offs, only the last payment date makes a difference. 

Basically, you get punished by the credit bureaus, if you make a payment on an old debt. 

@James O Nix Is a perfect example of why I always recommend landlords take their tenant to small claims court to get a rulingr on file. 

Originally posted by @Ryan E. :

Why not pay off the whole 4700? 

 Never said I wouldn’t just was asking what would be the opinion of others on what I should

@James O Nix I was just inquiring if there was a good reason to not pay off the entire amount...maybe there were extra fines or something. Sounds like you are on the right track though. Good luck! 

Originally posted by @Brad Smith :
Hi James. The ideal solution would be to negotiate a payoff at a reduced amount and have them DELETE the account instead of merely showing as PAID. Otherwise you could take a big hit to your credit score as a result. One way or another it has to go either via deletion or dispute removal.

 If You were to go this route what would be your start off negotiation price for a reduced amount on a $4700 debt? 

You said it is 6 yeara old....when does it age to 7 years? It will drop off your report then.

Originally posted by @Michaela G. :

Pay it off for your integrity, but only when it's been 7 years and has fallen off the credit report. 

The problem is that credit scores on charge offs are based on last activity date. So, if it's 6 years old it no longer has such a big effect. BUT, if you make a payment (even if you pay it all)NOW, your last activity date would be NOW and suddenly it looks like a recent charge off and the 7-year clock will start new. 

Paid charge-offs are coded the same as unpaid charge-offs, only the last payment date makes a difference. 

Basically, you get punished by the credit bureaus, if you make a payment on an old debt. 

 See that’s the thing the debt is actually 8 years old (2012) but it’s showing it’s only 6 years old. I guess that’s the last activity date on the debt. I never was against paying it off I just read exactly what you said about paying on it affect my credit in a negative way that’s why I wanted to know should I just go in with trying to pay a reduced amount on it 

@James O Nix

There is a saying in credit: "Let sleeping dogs lie."

Seriously listen to @Michaela G.

Everything that I've been taught about credit history is spot on to what she's saying.

If you go and pay off the amount it will become recent history and carry more weight than just leaving it alone.

If you're going to do anything, speak with a reputable credit repair person. You don't want to negotiate and pay off an old charge on your history unless they agree to remove it. Otherwise, you're better off leaving it alone and explaining it asked about it.

The only way to get a judgement removed is to either have it vacated or set aside. Otherwise, it will go away on it's own after 7 years.

Originally posted by @Russell Brazil :

You said it is 6 yeara old....when does it age to 7 years? It will drop off your report then.

 On credit karma this is exactly how it’s on there 

Opened: March 12,2012 (6 yrs, 1 mos)

Originally posted by @Thomas S. :

@James O Nix Is a perfect example of why I always recommend landlords take their tenant to small claims court to get a rulingr on file. 

 And you are a perfect example of why people are a little hesitant to post on here. This happen 8 yrs ago I was young and made some mistakes imma totally different person now. Furthermore, if somebody ask for help give your opinion to try to Help them not make fun of there situation or just don’t reply at all 

2018-2012 is 6 years not 8

Originally posted by @Ryan E. :

@James O Nix I was just inquiring if there was a good reason to not pay off the entire amount...maybe there were extra fines or something. Sounds like you are on the right track though. Good luck! 

 The crazy part it is. I never owe that much I owed $1700 and somehow someway my debt is $4700. So I won’t feel no way about negotiating a deal for a reduced amount because I know I didn’t owe that much. But thank you tho 

Ok, I'm guessing that this might not just be a debt, but a judgment, that the landlord got? A judgment stays on for 10 years and it can get renewed, but most creditors don't do that. 

If it's 'only' a debt, then try to find some proof that this is actually 8 years old and write to all 3 credit reporting agencies with that proof and ask them to delete. 

You'd first have to get your credit reports - www.annualcreditreports.com - and print out your reports. The reports will have a number and you'll have to use those numbers to file it. Send it certified, return receipt requested, so that you have a signature. They'll have to respond within 30 days or delete it from your reports. 

BUT, that will only happen, if it's just a debt and not a judgement.

@James O Nix , 

I would NOT go to a credit repair company. There are very few legitimate ones out there. The majority are not equipped to do much more than you can do on your own.

I am also in the "pay your debt" camp. While this is an older debt from when you were younger, it's still your debt. Making dumb moves as a teen or young adult is normal. 

Imagine if you were that landlord. You'd want to be paid, right?

James O Nix I’m not an attorney or expert on this matter, but firstly 2018-2012 was 6 years ago. It may have happened 8 years ago but if it’s a judgement maybe the judgment didn’t happen until 2012.

If it’s a judgment I’m guessing you may have been accruing interest or fees for these last years since you haven’t paid it. If it’s a debt and you haven’t been paying anything on it then it’s definitely interest and back fees etc.

I would figure out which it is and avoid credit repair companies.

Finally if you want to be a landlord you should pay this off and then if you’re still a tenant yourself, become an ideal tenant. I’m a landlord and a tenant and I prefer to treat my tenants like I treat my own landlord.

Good luck!

FWIW, I had a bogus 5-6 year old collection for $100 on my credit report, when I bought my first home.  I should have fought it years earlier, but just never bothered because I was naïve about credit reports/scores and didn't care.

Three days before closing, word came down from the bank's underwriting dept. that I needed to pay that collection off and send them proof I had done that.  It made for a frantic couple days to make that happen but, fortunately, I did.

I'm not saying all banks would require that, but I suspect many would. 

@James O Nix  Keep in mind depending on the state, the actual judgment is still enforceable even if it's not on your credit.  Here in VT it's 8 years and can be renewed for another 8.  So it's possible if the creditor found out you bought a house, they could still put a lien on it. It's unlikely, but legally possible.

-

Are you going to have a problem with a tenant not paying you $4700?  

Square up with whoever you owe the money to before you worry about buying property.

@James O Nix I know of someone who is an expert at helping people in your situation. Please feel free to PM me if you have any questions. 

@Michaela G. is 100. you must have that charge off DELETED. Do not pay it on your own.  That will clear up your score. Once you get this done, your score will jump to the high 600s and you can secure $100k to $150k in credit that can be converted to cash. I personally know many people that have done this, as I have helped them to get this done. Some even get $200k, interest free for 18 months.

If this is a judgment, that is a different matter. FYI, we regularly settle judgments for pennies on the dollar, and judgment enforcers know that the $4700 is likely interest heavy. You need a judgment enforcement attorney to call on your behalf. There is nothing standing in your way of your first house hack.

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