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cecrva

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Advice? Paid off collections. Score dropped AND they're still on report.
I was laid off and had 3 accounts go into collections. I'm finally back to a full-time salary so, several weeks ago, I paid all 3 debts off in full. So, what happened? My score plummeted more than 50 points! The activity dates have all been updated, but the balances/delinquent status have not. According to my reports, I still owe all of those debts, only now they look more recent. I'm so disheartened. I need to apply for a new apartment this month (to be closer to the new job) and am concerned that this will affect my chances of lease approval. Any thoughts? How can I salvage my score?

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well, the bad news is that even after the balanaces update, your score will not rebound right away. the dates of the collections have a big impact on score. as you move away from them, your score will come back and they will effect your score less over time. one shot you have is to call the companys and ask them to delete your accounts. sometimes they can do this with the credit reporting agencies. 

all is not lost though. keep in mind companies do understand situations. if you can provide a reasonable explantion for your hardship, the company will most likely understand. you lost your job, now you have one. you've made good on your debts (get all your paid in full letters to show the leasing company). explain your situation, often times they are not heartless. they want to rent apartments. 

outside of that, you could also look into renting privately. private individuals do not always pull credit, and if they do they can make more exceptions than a big company can. 

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Advice after the fact

is hard to stomach.  But, if your ever in this kind of situation again, Negotiating with the creditor BEFORE paying them could have produced a better outcome. You can ask for whats known as a "Pay to Delete" meaning that they agree to remove or delete the derogitory remarks from your report when you pay the debt.  These kind of agreements need to be negotiated in advance and agreed to in writing before money is paid. 

Paying off debts is one of those things that doesn't make sense on credit reporting, but any major changes tend drop scores right off the bat, but they do bounce back with in a few months. Credit reporting is a Behemouth that is slow moving and takes its time. But the fact that the debts are paid off will have a positive effect in the long run. 

Good luck 

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Thank you.

Yes, it is a little hard to stomach. But I do sleep better at night knowing that the debts are settled. I guess this portion of my application is out of my hands right now. Hopefully, potential landlords will look at the bigger picture (great rental history, good references, solid new job...). Anyway, thanks for the responses! 

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