The better option would be for the department to take the $1.4 billion it paid collection agencies and other groups last year and use it to establish a division that deals with delinquent debts and loan disputes.
Ms. Davies, of VantageScore, noted that all collections were somewhat predictive: a person with a paid collection is generally three times more likely to default on a bill than someone without a collection, while an unpaid collection tells lenders you're seven times as risky.
ReCellular uses half what it recoups to pay collection partners and shipping costs; another 40% goes to salaries, operations and overhead costs.
The big question is whether FICO's scoring strategy will eventually ignore paid collections, too, since that would have a much broader effect.
"Now, you have the two most prominent credit score developers agreeing, indirectly, that small and paid collections are worth ignoring," he said.
Instead, the company found that paid collections are less accurate at predicting future defaults than looking at unpaid collections in combination with a variety of other factors, like the age of consumers' accounts and the size of their loans.
And ignoring paid collections does little for the millions of people who cannot afford to pay their medical debts because they are underinsured, uninsured or simply can't keep up with the growing amounts their health insurance policies require them to pay.
The move has been criticised in some quarters, with 40,000 of the city's 400,000 households signing up for paid collections, although the council said it was receiving 1,000 new subscribers each week.
Filing 1040-X is much cheaper than being audited and having to pay collections.
Andrew Sullivan (Counter Culture, Jan . 9 mistakenly assumes that a flat tax on income will simplify the paying and collection of income taxes.
"We've heard from so many people over the years who thought that paying a collection account would help their credit scores.
