charged off change to paid in full

[Anonymous]

Hi I had an important question about my credit report, currently from a several yrs ago I had a credit card through a bank and currently on my credit report it shows "chargedoff", and they sent the debt to a collection or some other company called first resoutions, the amount is 1600 dollars, and I did talk with the third party company and the bank and the third party (first resolution) said they will report as "paid in full" once I pay the balance of 1600, and the bank said once it is paid I can send the documents to them from the third party company and they will change the status of "chargedoff" to "paid in full", will this increase my credit score? I did not want to do a settlement which I have been told it could drop my score, I have the money to pay in full so I would like to do that, I just want to know for sure if my credit score will raise after paying this debt in full and the chargedoff status and third party status will aay paid in full. Thank you. (btw they did say paid in full status and not paid chargeoff status)

[Billybob_TX]

Get everything in writing from every party. People lie.

[djrez4]

I was just talking with Capital One's exec line yesterday about a similar topic.  My one baddie is a charge-off from them from 2007.  I paid $700 of the $1070 balance in 2009 and they considered it settled.  It's not reporting entirely correctly and I've been disputing it without luck.  I asked if they'd remove the trade line if I gave them the extra $370, but they refused.  I wonder if they'd be willing to update it to PIF and in good standing.

[RobertEG]

Changing the status to paid will not, in and of itself, delete the reporting of the CO, and thus the CO remains as a major derog in your scoring until it is ultimately excluded after 7 yrs + 180 days from the DOFD on the OC account.  It will simply provide notice to others pulling your CR that the debt has been satisfied.

If you settle for less than the full amount of the debt, the creditor can additionally report a special comment of settled for less, which is in and of itself  better than not showing paid, but also tells others that, in the past, you did not fully pay all debt incurred.  That may or may not affect their lending decisions.  By offering to report "paid in full," that infers their agreement not to report that additional special comment.  Make sure that is their understanding.

The best course is get agreement from the creditor to delete the reported charge-off in exchange for payment.  A PFD offer.

If they wont delete, fallback is to at least get their agreement not to report the additional special comment of paid for less if your satisfaction of the debt is a settlement agreement.

[Shogun]

+1 RobertEG.   You want to do a PFD.  That would be your best course.

[AndySoCal]

The question is what do they mean by padi in full.  Is  the status going to change from charge off to paid charge off  or paid in full. Also howin the collection agency going to report the trade line as apid collection? Check before agreeing to anything.

[RobertEG]

Bottom line is that there is no "the status" of an account.

Reporting codes are present to store both current and prior status of various events.

The one usually of most concern to consumers is current status, which is just a snapshot of...current account status.

When a current status that was previously delinquent is updated to reflect paid, with or without an added "paid for less" special comment, current status is no longer reflecting prior account delinquency status, but that does not mean the account no longer retains record of that status.  It is shifted over to and retained in your Payment Rating status, and is thus still reportable in the consumer's credit report.

Prior reporting of a charge-off is retained in both the payment rating status and in the payment history profile, as is the date and amount of the original charge-off.

[AndySoCal]

RobertEg,

In simple terms is the Manner Of  Payment going to be 9 with zero balance reported indicating eith charge off or collection paid. Or is it going to be an MOP of 1 with a zero balance indciating a paid account. There is a BIG difference. I used status because paid charge off is or apid collection is easier to understand than the other I just used.

[RobertEG]

You dont "pay" the reporting of a charge-off or collection.  They are actions taken along the path by parties who are attempting to collect the debt.

You pay the debt.

Those actions stand once reported unless modified or deleted.

When a debt is paid, the debt balance is updated to $0 by the owner, and if a non-owner debt collector has reported a collection, they update the amount they are authorized to collect to $0.  Those updates dont apply specifically to the reporting of the derogs themselves.  They apply to account debt/payment status.

The status of debt is reported separately from the status of derogs.  The CRAs retain prior derog status under separate codes.

What may be confusing is that while an account is delinquent, its current status reports its derogatory status.  However, when paid, the current status switches over to a payment status.  It's a hybrid-type reporting code. So other codes are used to retain the reported derogatory history, such as Payment Rating and Payment History Profile.

A paid CO would have an account payment status of paid, with or without an added special comment of paid for less.  Whether they choose to report settlement for less as the method of payment is up to them.  Its separate payment rating code is unaffected, and preserves the prior status of their derogatory action.

[AndySoCal]

I am confused RobertEG in your first response you said there is no usch thing as a status. In last reposne in paragrphs two and three  there is such a thing as aa status.  lastley in order to pay the debt of any sort you need to tell the creditor which account to apply the apyment to.