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If you pay it, do it now. If that is your only current negative, you can show 12 months good credit when you apply for your mortgage.
I think the advice to not pay a CO is if isn't reporting negatively each month. I'm not sure though because I am in the "pay off CO" camp no matter what. Under manual review, your LO may require you to pay it anyway.
I settled a charged off cap 1 account back in march. It was still with the cap 1 showing a balance of $587 after I paid the settlement amount of $1300. After it finally reported a zero balance on my credit reports my TU score jumped 56 pts. My EQ only bumped up 11 pts. I had 3 other charge offs that were with the OC's and each time my score was positively affected by them being paid.
I also had 2 charge offs that were with CA's. I settled both of them and neither negatively affected my scores. One was with Portfolio Recovery for 5,700 and the other was with Midland 4,600. They still show date of last activity at 2004.
Since my Dola wasn't changed, does this mean fair isaac has been changed so as to not penalize people for paying there collections?
If you are over 620, paying this does not help you.
FHA doesn't require collections/chargeoffs be paid. Most lenders do not require them paid either.
I called capital one directly and told them I wanted to settle. They gave me an offer of 50% off. If you decide to settle, make sure you get it in writing first (fax) before giving them any money. Send them a money order with a copy of the letter overnight mail.
@DallasLoanGuy wrote:If you are over 620, paying this does not help you.
FHA doesn't require collections/chargeoffs be paid. Most lenders do not require them paid either.
I paid mine not just to qualify. I owed those debts andI wanted peace of mind that I wouldn't get phone calls from new CAs or the hassle of disputing CAs that show up on CRs after 7 years. For me it was worth it.