Credit score surprise

12 Replies

Hey everyone. So we've been looking at a property and went to go get prequalified. Both my wife and I have had high (800+) scores all of our lives, but when my credit was pulled we found a nasty surprise. Apparently fly the utilities on one of our properties had sent us a bill to an old address and bc we never knew about it it went to collections.  I just finished paying the people but can anyone give me advice on what happens now? It changed my score from 800 to 600 something bc it sat there in collection for a year and I was never called or notified.  

Very frustrated and not sure if it matters what I do?  Is there any way to resolve it with the credit reporting companies? Or am I stuck with a bad score bc of a $60 bill that got missed?

Sorry to know about your situation. I am not quite sure if it help but the first step would be to reach out to the collection company/utility company to explain the situation and to request them to remove it from the Credit bureaus. There must be at least a decent 50% chance that this trick should work. Good luck and let us know what happened. Thanks!!!

Dispute the item as an error to the credit bureau. With a good strategy you can remove this within 3 months.

@Farakh Zaman

You're just going to have to wait a couple of months for your scores to move back into the 700 range.  Don't dispute anything if you're looking to get a mortgage because you'll have to take it off in order to get the financing.

Time is your best friend right now.

Reasonable people will react to reasonable documentation.

Write a brief letter to explain what happened and how YOU solved it, including a copy of the check used for payment.  They can ignore the FICO if your smart in following thru immediately with good data.

Secondly, if it really went to collections, you would have been hounded with phone calls and you would have known.  A collections company *MUST* give you written notice that they have been assigned or have acquired the debit, on a given date and the amount due.  Note this also in your explanation to the lender - - lack of notice and collection procedures.

@Farakh Zaman That is definitely a disheartening situation, I have 750s score and know how you feel. I can't stress enough to check your credit reports at least every 4 months with 1 of the bureaus but it sounds like this couldn't have been prevented since your mail wasn't forwarded. I do everything utility wise for my rentals and my primary online and can check when bills are due and what not. 

Look into the Fair Credit Act, if they did not give you written notice, and then put something on your credit you have the right to sue for damages plus 1000 per infraction. You are probably hosed in the short term, and unless you want to do leg work yourself might not pursue it long term. You need to ask yourself is the juice worth the squeeze. If you are looking to move heavy and fast next year, might be worth looking into a lawyer. If more of a 1-2 per year is your goal might not be.

@Farakh Zaman man......I feel your pain. Although I don't know what it's like to have a high 800's score I do know what 790's look like.  With that said, I've had a similiar situation and I contacted the creditor directly and asked them to remove the derogatory from the record.  The were kind enough to remove it on 2 of the 3 bureaus.  At this point man you have to practically beg and plead with a high level representative of the company to have the ding removed.  Good luck man and again sorry to hear.

Thanks for the feedback everyone.  I am still upset about it and appreciate the feedback. I called the company and spoke to a supervisor and got told tough luck basically and to call the collection agency. Called them and the lady was actually very nice and understanding but she really couldn't do anything but take my payment. $64! Ridiculous such a pain for such a petty amount.  The company had my phone and email but never reached out.  I plan on calling the company again and trying to work it with them. Maybe someone will be kind. Otherwise it's on my record for 7 years which just sucks.  

Also what is weird is the collection company stated they called 74 times over the last year.  I asked what number and was told mine but I have never received a call. Does anyone know if Verizon blocks those numbers?

I may actually consult a lawyer to find out if anything can be done.  

@Farakh Zaman don't beat yourself up too much. The score dropped that much only because it is a recent event. I would not be surprised if your scores jumps back to above 740 in just a month or sooner. While 800 scores are great, having 740 or above will usually get the same interest rates as someone with 800 credit scores.

Paul Defngin, Lender in (#NMLS 199791)
240-268-3054

Farakh, you have excellent advice from others here. I worked for banks and after seeing over 1,000 loan applications I can share a couple of thoughts about the credit situation you described. The credit score is relevant only in relation to the specific parameters for the loan you request.

If you are seeking a very low down payment (95-97% LTV) for a conventional long term loan, then the score matters. These types of mortgages are originated according to Fannie/Freddie/Ginnie guidelines that make them eligible for sale in secondary markets. It's a kind of mindless "checklist" way of underwriting loans, and if your score is 1 point below the minimum it's denied and 1 point above is approved.

If you know that you will be selling or refinancing with 3 - 5 years, then a more flexible "Alt" loan through a bank that combines a fixed period that converts to an adjustable rate is more flexible with regard to income and credit.

Credit problems can be explained as a "one time set of circumstances that do not reflect ongoing consumer behavior." Examples are medical issues, job loss, lost business income related to economic changes, and others that you can demonstrate happened at a fixed point in time and are not ongoing.

And others who have commented here are correct, your score was torpedoed because of its recency. It is far outweighed in the scoring algorithm by other positive factors, and it will shoot back up in a short time.

Your lost utility bill, like an unpaid parking ticket that shows up in your credit profile, will not keep you from being approved for a loan. Bank underwriters have these things happen too.

@Brent Myotte thanks for the info as well as everyone else.  Will just keep doing what I do and move on with a hard lesson learned and hopefully someone else can learn from my mistake as well.

So FYI as a follow up on this from 6 months ago...I got a hold of the collections agency and just paid the stupid bill of ~60 bucks.  Today my loan officer pulled my credit and it had shot back up to right around 800.  So in case anyone else runs into something similar, this is how it worked out for me.

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