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Paul Yamilkoski

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Stop – Don’t Just Pay Collections!

Have you ever encountered someone that has credit scores that are a little too low to be able to get them a loan? Have you ever told them to go out and pay off the collections on their report, to improve their scores? Have you ever heard someone say that they were going to pay their collections off, to improve their credit scores?

If you have ever given someone those instructions, or have heard them say it, or any similar scenario, then please stop them right away. As crazy as it may sound, they may be on their way to a disaster, in the worst case, or spending a lot of money and not helping themselves at all with score improvement, in the better scenario.

I know, it sounds crazy that doing the right thing, taking responsibility for your debts and paying them off could be damaging to your credit. But the fact remains, because so many companies, either intentionally or unintentionally, improperly report activity on an account, the general result of paying on or paying off a collection is destructive to a person’s credit.

The cause behind this problem is a little thing on our credit reports called DLA or date of last activity. This misunderstood term, in reference to collections, refers to how old an injury that collection is. This is important because, in credit, just like when our body gets injured, a injury hurts the most when it initially happens. Then as time goes by the injury heals and hurts less.

So, when an account becomes a collection, that account is hurting the most it ever will from that time on. Going forward the injury is supposed to heal, just like our body would.

Now lets say you tear the scab off that wound. You are right back where you started and it has to heal again. That is what most commonly happens when people pay on or pay off a collection. The scab gets pulled off and the injury is affecting your credit as if it just happened again.

That is not supposed to happen. In fact it is illegal. But it happens ridiculously often and little is done to enforce proper reporting.

The fact is, technically speaking, a collection can not actually have the scab removed. The date of last activity for a collection is the date it first went delinquent and never went back to good standing. Once that clock started and it became a collection, there was no going back, ever, no matter how many times you talk about the debt with the company, no matter how many payment arrangements you have made for that account, and no matter how many times the debt was sold.

A great analogy is an automobile. Once that 2003 Chrysler Town and Country went into production and became a 2003 Chrysler Town and Country, it was always a 2003 Chrysler Town and Country, no matter how many times it was repaired, crashed, modified, maintained, or sold.

Like I sad before, it is illegal to effectively “tear of the scab” of a collection, but it happens and it hurts.

So, if you are telling people to go out an pay collections to help their scores, or you hear people talking about paying collections to help their credit scores, stop them. Have them get help with making sure things get done right. In fact a reputable credit restoration company, such as Heartland Credit Restoration, will do even better than that, and in many cases can potentially help you get the account completely removed from your credit as part of the deal in settling it.

Don’t suffer for trying to do the right thing. Get some help.

If you, or someone you know,  has run into credit problems and could use a little credit help, a reputable credit restoration company like Heartland Credit Restoration is a great place to start. You will reach your credit goals much faster and safer with the help of a professional, and you will have loan ready credit.

Call me for a free consultation to see how we might be able to help. 319-533-5236.

If you are a lender or realtor that has a client you might have to turn away due to credit problems, then let me see if Heartland Credit Restoration can help change that client into a approved client with loan ready credit.

You should never have to say “NO” to a client. We can help change those into a “YES”.

Call me for a free consultation. 319-533-5236.

Don’t forget to let me know what you think. I always welcome comments. And please do me a favor and share this with your contacts on social media.

I’m looking forward to helping you.

Until then, I hope you have a wonderfully blessed day!

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