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freedom6584
Posts: 3
Registered: ‎07-30-2007
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I recently paid off two "charged off" accounts,...

I recently paid off two "charged off" accounts, yet I paid the settlement price and not the price in full.  The guy from one of the companies mentioned that it would read on my report "paid for less than the balance"...does any think I should try to pay off the rest? or has anyone had experience with accounts that went to collection and recovering a 700+ credit score eventually?
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TheNewWorldMan
Posts: 2,374
Registered: ‎03-15-2007
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Re: I recently paid off two "charged off" accounts,...

Your FICO score doesn't care whether you pay a charge-off or not.

On most manual reviews, paid in full looks slightly better than settled, which in turn is just a tad above open and unpaid.

But by and large, the damage is done. Focus on good credit going forward...make sure you have at least three or four revolving charge accounts that are paid on time each month, with less than 10% utilization.
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Tuscani
Posts: 6,182
Registered: ‎03-29-2007
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Re: I recently paid off two "charged off" accounts,...

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Noah_Bodie
Posts: 4,635
Registered: ‎03-11-2007
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Re: I recently paid off two "charged off" accounts,...



freedom6584 wrote:
I recently paid off two "charged off" accounts, yet I paid the settlement price and not the price in full.  The guy from one of the companies mentioned that it would read on my report "paid for less than the balance"...does any think I should try to pay off the rest? or has anyone had experience with accounts that went to collection and recovering a 700+ credit score eventually?

Did you sign anything when you paid the chargeoffs?
Did they send you anything after you paid the chargeoffs?
Did they mention anything about a 1099 for the balance?
 
Were I you, I would not pay them just to pay them. You will NOT gain anything. The only way you gain is if you get them to agree to a PFD for the difference, or you get a GW delete.
 
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swanbird
Posts: 5
Registered: ‎03-29-2007
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Re: I recently paid off two "charged off" accounts,...



Noah_Bodie wrote:


freedom6584 wrote:
I recently paid off two "charged off" accounts, yet I paid the settlement price and not the price in full.  The guy from one of the companies mentioned that it would read on my report "paid for less than the balance"...does any think I should try to pay off the rest? or has anyone had experience with accounts that went to collection and recovering a 700+ credit score eventually?

Did you sign anything when you paid the chargeoffs?
Did they send you anything after you paid the chargeoffs?
Did they mention anything about a 1099 for the balance?
 
Were I you, I would not pay them just to pay them. You will NOT gain anything. The only way you gain is if you get them to agree to a PFD for the difference, or you get a GW delete.
 


Whether or not to pay a chargeoff is not as simple as that. As the previous poster mentioned, it is true that the FICO model punishes consumers for paying a chargeoff (because the DOLA updates so that the chargeoff appears more recent). In most cases, it could be better to not pay a chargeoff and, as the chargeoff ages, your score will rebound.  However, if the creditor who charged off the account reports the chargeoff and updates the balance every month (e.g., CapitalOne), you will not have a chance to let the CO age, as it is being re-reported with a new balance every month. You would have to wait for the account to drop off your report 7 years after the date of first delinquency.
 
Even if the creditor is not re-reporting the chargeoff every month, another consideration is utilization. Utilization is about 35% of your FICO score, so it is important. The chargeoff balance is included in your utilization (revolving balances/revolving credit limits), but the card's previous limit is not. For example, if you have one revolving account with a $100 balance and a $500 limit, and one CO with a $500 balance and a $0 limit, your utilization will be $600 divided by $500 or 120%. This level of utilization will have a negative effect on your scores. You could still overcome this problem by establishing new revolving trade lines or increasing limits on existing trade lines to lower your utilization. However, if the chargeoff balances are large in comparison to your good trade lines, it will be very difficult to overcome the damage that the chargeoffs are causing to your utilization.
 
Sorry to be so long winded. It's just that credit repair is not as simple and straight forward as some would imply. Your decisions have to take into consideration your unique circumstances, not just follow a bright line rule that may not apply to you.
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credit4me
Posts: 348
Registered: ‎06-27-2007
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Re: I recently paid off two "charged off" accounts,...

Is this also true for a phone bill or something other than a credit card?


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Noah_Bodie
Posts: 4,635
Registered: ‎03-11-2007
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Re: I recently paid off two "charged off" accounts,...



credit4me wrote:
Is this also true for a phone bill or something other than a credit card?

Also true in what way?
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freedom6584
Posts: 3
Registered: ‎07-30-2007
0

what is a late payment

So, I just started paying on my car note and it is due the 1st of every month.  Yet, they give me til the 15th to make the payment before late charges are incurred.  If I pay them on the 8th, will that be consider a late payment and show up on my report?
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guydiver
Posts: 576
Registered: ‎08-30-2007
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Re: what is a late payment

If the car loan is due on the first, they are giving you until the 15th(grace period) to pay the amount due without any interest penalty.  After the 15th, they will charge you the interest penalty(usually noted on the statement or payment coupon), but the account will not be reported as late until the 30 days from the actual due date.
But be very careful.  If you mail on the 13th or 14th, it probably will not post until after the 15th, and you will still owe the interest penalty.  Likewise with the 30 day past due limit.  It all depends on exactly when the payment "posts" to your account.  Otherwise, you would still get a positive payment history as long as you do not hit the 30 day limit.
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cheddar
Posts: 6,794
Registered: ‎09-29-2007
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Re: what is a late payment



guydiver wrote:
 
Otherwise, you would still get a positive payment history as long as you do not hit the 30 day limit.


It should be noted that this is true most of the time, but some creditors will report 30 days late even if late by less than 30 days.
 
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