topic Re: R9 to R5 Derogatory ! in Rebuilding Your Credit

R9 to R5 Derogatory !

suebee123 — Mon, 09 Apr 2012 20:22:49 GMT

I just got off the phone with Cap 1 they are changing the reporting of my account from R9 to R5. It was originally reported as "settled for less than the full balance", now it will be reported as "settled, before chargeoff".

She said it's better than R9. Does anyone have experience with this, and should I see a score increase. It's my only "collection", problem account. It's three years and the DOFD will be reported as 03-2009.

Re: R9 to R5 Derogatory !

pizzadude — Mon, 09 Apr 2012 20:57:01 GMT

suebee123 wrote:
I just got off the phone with Cap 1 they are changing the reporting of my account from R9 to R5. It was originally reported as "settled for less than the full balance", now it will be reported as "settled, before chargeoff".

She said it's better than R9. Does anyone have experience with this, and should I see a score increase. It's my only "collection", problem account. It's three years and the DOFD will be reported as 03-2009.

Unfortunately I believe that either one of the classifications is equally bad from a FICO perspective. Settled is scored identically to a Charge~off.

Re: R9 to R5 Derogatory !

suebee123 — Mon, 09 Apr 2012 21:07:37 GMT

Thanks, that's what I thought. I will wait till it reports and see what happens.

Re: R9 to R5 Derogatory !

RobertEG — Tue, 10 Apr 2012 01:25:52 GMT

Did the creditor actually do and report a charge-off? That status is dependent on that event having occured.

Changing a current status code does not create or report a charge-off. Kinda confusing....

Unless a charge-off is actually deleted, it will hurt regardless of whether they report an "R9" or "R5".

Re: R9 to R5 Derogatory !

suebee123 — Tue, 10 Apr 2012 01:42:16 GMT

@Robert...I don't know,they haven't changed it yet. This is the Cap 1 account that was current and never late, Cap 1 sent me a letter saying if I didn't make my next payment as scheduled they would "write it off". I don't know why they sent me that letter, it was during the Financial crisis and maybe they were trying to write down debt? Anyways, I took advantage of it. It has been reporting as a R9 derog. "settled for less than the full balance". Chargeoff I guess. I went back after 3 years and paid the difference, hoping they would change my reporting to something positive. Well, after months of of back and forth, and them having to research how it should now report, they called me and said they were returning my money paid in Feb back to me and changing the reporting to R5-settled in full before chargeoff.

Is this still a charge off? I really don't know anything about the codes...but the CSR did say it was supposed to be better. I have no lates at all on my actual history, so 120 days late which is what R5 is...doesn't really make sense. Maybe a dispute down the road?

I just want to know if it will help my report and score at all??

Re: R9 to R5 Derogatory !

discernment — Tue, 10 Apr 2012 03:27:45 GMT

suebee123 wrote:

This is the Cap 1 account that was current and never late, Cap 1 sent me a letter saying if I didn't make my next payment as scheduled they would "write it off".

If this account was NEVER late, why would you agree to it being written off? And, I'm not sure why Cap 1 would send you such a letter on an account with perfect payments???

Re: R9 to R5 Derogatory !

RobertEG — Tue, 10 Apr 2012 04:03:35 GMT

Settling for less than the full debt is NOT a charge-off.

A charge-off is the handling of a debt that has reached the stage of delinquency where the IRS permits them to shift the bad debt from a receivable asset to an unreceivable bad debt, and thus gain a tax advantage. The debt must have been delinquent, and the credtior must have held the delinquency reached the stage of being considered "uncollectible."

It is a specific accounting measure.

It does not appear to me that they ever did a CO, and if they did, it would be improperly reportable if the account was not delinquent at the time of their puported charge-off.

With that verbage aside, how did they charge-off a debt as "uncollectible" if it was paid prior to them conducting any such accounting measure?

I think they are blowing a smoke of terms at you, all of which only cloud the air.

Re: R9 to R5 Derogatory !

suebee123 — Tue, 10 Apr 2012 15:29:10 GMT

@Discernment: when I rec'd the letter I had just taken a 40% drop in income which is why I let them write it off. Obvously, If I had known they would ding me I would have continued paying it.

@Robert: They did settle before it every went to chargeoff / collection status. I do feel it's been reported incorrectly all this time. I'm just not sure that a R5-settled in full before collection" is accurate either. I read that R5 is 120 days late...the account has NO late payments reported on it.

I agree it's not a chargeoff, never was. I think they are stumped as how to "ding" me but not reflect a charge off, so let's add R5 120 days late??? Sounds like I will dispute this in the future. I will keep you updated when it reports. Have a feeling it won't help me either way.

Re: R9 to R5 Derogatory !

suebee123 — Tue, 10 Apr 2012 17:16:56 GMT

@Robert- I feel like calling them and getting more information. You seem very knowledgeable, can you think of any specific questions I should ask them about the reporting on this account?

1. Was this account actually charged off?

Can you think of anything else?

It's my understanding R9 is a collection code? Is that correct? and R5 is 120 days late? Doesn't seem like that fits my situation either. What about the special comments "settled in full before chargeoff"? What hurts a score, the codes or the special comments they place? Or both?

Any advice is appreciated.

Re: R9 to R5 Derogatory !

discernment — Tue, 10 Apr 2012 17:44:15 GMT

suebee123 wrote:

I agree it's not a chargeoff, never was.

If this is being reported on your CRs, I would dispute it as INACCURATE information so that the tradelline could be deleted and no longer lower your FICO® as a R9 or R5 either one -- you should not be punished for a timely paid -- paid off account.

Re: R9 to R5 Derogatory !

suebee123 — Tue, 10 Apr 2012 18:00:11 GMT

I think my problem lies in the fact I "settled" the account before it was ever late. It was never a collection or chargeoff, but was settled !