topic Re: What is the appropriate status for a paid/closed installment account? in Understanding FICO® Scoring

What is the appropriate status for a paid/closed installment account?

R_W_ — Thu, 30 Aug 2012 17:13:45 GMT

When you pay off an installment loan, is it common practice for them to change your account status to your worst delinquency. I spoke with the CRA's and they said it is up to the crditor. They can leave it as the status as of the time that you closed it, or they can make it the worst delinquency over the course of your account history. For example, if you had a 30 day late 5 years ago, but they have been reportting you as current since then, when you pay/close the account, they can use that field to report the "entire account status" and put your account status back to 30 days past due, because you had once been 30 days past due. It seems like the field "worst delinquency" is the place for this information and your account status should be where your status was at the time of closure. Or they can leave it as paid as agreed because that was your status as of the last month reported.

Which was is the FICO scoring model expecting them to characterize this account?

Re: What is the appropriate status for a paid/closed installment account?

RobertEG — Fri, 31 Aug 2012 01:11:19 GMT

You have two reporting codes/status dates in your file which, taken together, handle this situation, retaining both pieces of information... highest delinqeucny, and paid.

Current status reflects a snapshot of the accurate status of the account at the time of the last/most current reporting. It has no historical memory. Thus, its name "current status."

Current status is a hybrid code, meaning that it can report two different things... delinquency status or current payment status.

When an account is delinquent, the current status reflects its level of current delinquency at the time of reporting. However, if the account is then paid, either back into good-standing if still open, or paid if it is closed, the current status is updated to now reflect its payment status.

Thus, a way is needed to still retain the level of account delinquency at the time it was paid and its current status switched over to a payment status. That is where the separate "Payment Rating" code comes to play. The prior current status of delinqueuncy level is moved over to the Payment Rating code.

The two codes, taken together, paint the full picture of the level of delinquency at the time of payment, and that the account is now back in good-standing or closed and paid.

Perhaps what you are seeing in your CR is the Payment Rating on the account, which would continue to retain and thus report its highest delinquency level.

The current status should simply read "Paid."

Re: What is the appropriate status for a paid/closed installment account?

kobe2012 — Mon, 03 Sep 2012 05:07:39 GMT

RobertEG wrote:
You have two reporting codes/status dates in your file which, taken together, handle this situation, retaining both pieces of information... highest delinqeucny, and paid.

Current status reflects a snapshot of the accurate status of the account at the time of the last/most current reporting. It has no historical memory. Thus, its name "current status."
Current status is a hybrid code, meaning that it can report two different things... delinquency status or current payment status.

When an account is delinquent, the current status reflects its level of current delinquency at the time of reporting. However, if the account is then paid, either back into good-standing if still open, or paid if it is closed, the current status is updated to now reflect its payment status.

Thus, a way is needed to still retain the level of account delinquency at the time it was paid and its current status switched over to a payment status. That is where the separate "Payment Rating" code comes to play. The prior current status of delinqueuncy level is moved over to the Payment Rating code.

The two codes, taken together, paint the full picture of the level of delinquency at the time of payment, and that the account is now back in good-standing or closed and paid.

Perhaps what you are seeing in your CR is the Payment Rating on the account, which would continue to retain and thus report its highest delinquency level.
The current status should simply read "Paid."

i have a charge off that went to collection but got it PFD.. The collection was deleted but the OC status still says "charge off" ..do you know if they will ever change it to "paid"?

Re: What is the appropriate status for a paid/closed installment account?

RobertEG — Mon, 03 Sep 2012 20:01:39 GMT

The reporting of the CO remains, as it is a prior delinquency code, not an ultimate payment status code.

What will change when the debt that was charged-off is paid is the balance due the creditor, which will be $0, and the current status, which will be "Paid."

A delinquency code is not altered by changes in its current payment status.

Re: What is the appropriate status for a paid/closed installment account?

R_W_ — Fri, 07 Sep 2012 19:04:03 GMT

Date of last reported update. Condition of account when last updated by creditor or otherwise.

Account Name

Account Number

Date Opened

Balance

Date Reported

Past Due

Status

Credit Limit

08/23/2008

08/23/2012

PAYS 31-60 DAYS

KIA MOTOR FINANCE

10550 Talbert Ave
Fountain Valley, CA-927086031

Account Number:	2008090575XXXX	Status:	PAYS 31-60 DAYS
Account Owner:	Individual Account.	High Credit:	$14,300
Type of Account :	Installment	Credit Limit:
Term Duration:	60 Months	Terms Frequency:	Monthly (due every month)
Date Opened:	08/23/2008	Balance:	$0
Date Reported:	08/23/2012	Amount Past Due:
Date of Last Payment:	05/2012	Actual Payment Amount:	$4,523
Scheduled Payment Amount:	$301	Date of Last Activity:	N/A
Date Major Delinquency First Reported:		Months Reviewed:	45
Creditor Classification:		Activity Designator:	Paid and Closed
Charge Off Amount:		Deferred Payment Start Date:
Balloon Payment Amount:		Balloon Payment Date:
Date Closed:	05/2012	Type of Loan:	Auto
Date of First Delinquency:	05/2012
Comments:	Fixed rate

81-Month Payment History

Year

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2012

2011

2010

2009

2008

If you look at the above from Equifax.com, there is a "Status" field which is saying:PAYS 31-60 DAYS and there is an activity designator and it lists: Activity Designator:Paid and Closed . The account history table shows there was on 30 day past due in Mar of 2009. The definition of the status field according to Equifax is: The condition of the account when last updated by creditor or otherwise. When I closed this account in June and the status changed from Current to PAYS 31-60 DAYS, I got a myFICO alert telling me my score had dropped (>70 points) and when I ran the report it said I had a recent late pay in the last month... I haven't had any kind of late pay in years.... this has to be the cause and if that is the case, I would advise anyone who has an old late on an account to not pay it early because FICO (my other scoring models did not do this) treats it as if you recently were late... I could have just as easily just kept paying the payments for another 2 years and not had this plummet my credit right before my refi....ugh

Re: What is the appropriate status for a paid/closed installment account?

RobertEG — Fri, 07 Sep 2012 20:22:03 GMT

The creditor misreported the current status. It should read paid. That supercedes its prior delinquency status.

Again, current status is just a snapshot of its status as of last reporting.

If the account was paid, it is no longer delinquent, mandating an update of its current status. They failed to do so.

Closed status is not sufficient to inform FICO that it is no longer delinquent, as delinquencies can continue to accrue and be reported on closed accounts.

The creditor is required to update so as to reflect accurate current status.

You can, if time is not of the essence, call them and remind them of their responsibility under FCRA 623(a)(2) to timely update their reporting so as to maintain its accuracy.

Or, you can file a formal direct dispute, citing the inaccuracy and their section 623(a)(2) responsibility to timely update, thus forcing resolution within 30'ish days.

Re: What is the appropriate status for a paid/closed installment account?

R_W_ — Tue, 11 Sep 2012 21:12:08 GMT

Thank you! I have sent a very specific dispute to the creditor and should have the results tomorrow. Hopefully, this will close out this issue for good. I asked that they change the current status and the DOFD. Hopefully, this will do the trick and I will get the interest rate I have earned and others will benefit from these posts as well.... wish me luck!

Re: What is the appropriate status for a paid/closed installment account?

RobertEG — Tue, 11 Sep 2012 21:39:12 GMT

Dont worry about any reporting of DOFD on this account. It is totally irrelevant.

Not having been charged-off or referred for collection, their was no requirement to have ever reported a DOFD, as it has no use.

DOFD has only one credit reporting use... the calculation of the CR exclusion period for a CO or collection.

Not having had either occur on the account, and with it now paid, you wont have either, it is academic.

While their unnecessary reporting of a DOFD is not accurate, it will never be used for anything. If they dont change the reported DOFD, I would not hassle over it.

Re: What is the appropriate status for a paid/closed installment account?

ghannan2000 — Mon, 17 Sep 2012 23:04:21 GMT

I have a similar situation and would appreaciate any thoughts on this. Several years ago Mar-2006, I paid off an installment loan. At the time of the last payment, I was 30 days late. Flash forward to Sep 2012, from the reporting end on EQ and TU , the "Current Payment Status" on myfico, reads "30 Days Past Due", however the balance field on the account reads "$0" .

So, if I am a human, this situation looks obvious to me (Balance is zero, therefore nothing owed, case closed). However, when i look at the "Accounts" summary page, the account shows in the balance field "0" but unfortunately "Status" appears as "30 Days Past Due". I've disputed this with the OC and they fall back on, that was the status when we last reported and suggest there is nothing they can do.

I realize I've only got 6 months and the account will come off completely, but I hate to think that all this time my fico score was calculating based on me being 30 days past due. Anyone have a similar experience and any resoluction?

Re: What is the appropriate status for a paid/closed installment account?

RobertEG — Tue, 18 Sep 2012 18:48:29 GMT

You are totally correct. Continuing to report the current status as 30-late informs others reviewing your CR that the account is currently delinquent. Thus, it is significant.

It is not necessarily conclusive that reporting a $0 balance signifies satisfaction of the debt. If a creditor sells a delinquent account, they would also report a current balance of $0/

They apparently have not read the CRA credit reporting manual, titled the "Credit Reporting Resource Guide," in which current status is clearly defined as a snapshot of the account status as of their last reporting, and does not reflect any prior, historical status.

A satisfied account is no longer delinquent. Its current status is Paid.

The 30-late would be reported, as your stated, separately as its Payment Rating code, which retains record of the level of delinquency prior to its current status.

I would advise them that they have a statutory requirement (FCRA 623(a)(2)) to update any prior reporting so as to maintain its accuracy.

Their prior current status of delinquent is no longer accurate.

Re: What is the appropriate status for a paid/closed installment account?

R_W_ — Wed, 19 Sep 2012 14:14:59 GMT

Thank you so much! They fixed it and myFICO is now 748...whew!

Re: What is the appropriate status for a paid/closed installment account?

ghannan2000 — Tue, 25 Sep 2012 16:35:04 GMT

It took about a week but the OC updated the CRA's to reflect Current Status as Paid as Agreed. I actually would have expected it to have some effect, but apparently not based on the Score Tracker. But at least it no longer looks to human eyes as being currently past due. For reference the "date reported" field for the account was Mar 2006, so unlike R_W_, I think that's the reason it likely was doing little damage, and the change resulted in little benefit. Thanks to all for advice and support.

Re: What is the appropriate status for a paid/closed installment account?

Shogun — Tue, 25 Sep 2012 17:22:37 GMT

Congrats to you!