Advice on chargeoffs & moving forward

[Anonymous]

Hello everyone, like many of us here I went through some rough times. Long story short, I was faced with sudden medical issues which forced me to use and max out my credit cards. I tried to keep up with minimum payments but it got overwhelming and no longer affordable so they did chargeoff. Some time has passed, I have a beautiful wife and 2 lovely kids, my dream is to buy them the home they deserve. In the last few months I have been working on improving my credit. I opened 2 credit cards (Capital one QS1 $400 limit & Platinum card-$500 limit). I been making each and every payment on time paying off my entire balance, I also opened up a electronic store installment loan and paid the entire balance off in 3 months (was a 12 month agreement). I live in the norther part of Texas, if you live here then you know how quickly houses are selling and going up in price. Our plan is to go the FHA route, I'm sure a conventional loan will be way out of the question for some time. With that being said, I want to get help on improving my credit, we are aiming for 2 years. I have attempted to talk to some lenders, but it seems like they get bothered to talk to someone in my situation. As soon as I mention my shaky credit they basically just run me off the phone. I was hoping a real lender could go over my profile and basically give me some guidance and advice on how to prepare for the mortgage process. So, I turn the myFico community for help, I will admit I have a lot of pride and did not want to post but feel like I need to suck it up and swallow my ego.

Below is my profile:

Fico Scores:

Equifax Fico8 - 575

Experian Fico8- 586

Transunion Fico8- 755 (I'm also surprised)

Mortgage Fico scores:

Experian mortgage fico score- 576

Transunion mortgage fico score-763

Equifac mortgage fico score-601

What I believe is hurting me are the following old account:

- Discover BankDiscover Bank-Charge off-$535-On record until 02/2021

- American Express-Says it's 108 days past due, I haven't made a payment since 2014-$102 balance

- Chase-Charge off-$1896-on record until 02/2021

- BOA-Charge off-$1180-on record until 09/2020

- Midland funding- collections-$435-on record until 12/2021

- Midland funding-collections- $470-on record until 12/2018

I'm willing to pay off all my chargeoffs, but have read a lot of conflicting information. I have read there is no point to pay them off as I'm past the SOL on all, and that it will hurt me more. I have also read that paying them off will initially hurt but then bring up score. I know this is a lot of information, I just want to get some advice. In reading some of these threads, I feel there is hope, a lot of patience will be needed but I feel like I'm setting a realistic goal.

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[thornback]

Every one of the charge off accounts reporting a balance is being factored into your overall util which is hurting your score even more. Since you are able, go ahead and pay / settle them so they officially close and report a zero balance. This will also prevent further updating of the tradeline from the creditors and allow the negative accounts to age. Decreasing the utilization by paying them off may also (likely) result in a score increase. Paying a charge-off does not hurt your score, nor does it re-age the debt.

After you pay, start a Goodwill letter campaign requesting deletions - this does not always work with original creditors, but it's worth a shot. Either way, a paid charge off is better than an unpaid chargeoff - especially if it reduces your percent of overall credit utilization.

The two Midland collections can be deleted after payment. They have a public policy of deleting collections from reports once the debt is paid / settled so long as it is at least 2 years from the date of first delinquency. Easy peasy.

[RobertEG]

Charge-offs are major derogs that affect credit scoring, but they are additionally, apart from credit scoring, a significant factor in any manual review of your credit history, and can be basis for denial of credit regardless of credit score.

As for scoring, a CO can be reported in two ways that affects scoring.

First, a reporting of CO in your prior payment history profile records, just as a monthly delinquency, that the account was delinquent in that month, and while not providing the specific time since first delinquency (e.g., 120-late), states that the debt was seriously delinquent (usually at least 120 late for an installment account, and 180 late for a revolving account), and that the creditor assigned the debt as a loss.

If the debt is subsequently paid, the prior recording of delinquencies, be they montly delinquencies or a CO, remain in scoring.

Second, a CO can also be reported as the current status, which separately updates the account to show that the debt is still unpaid.

That effectively extends the creditor's statement of the period of delinquency since it first became delinquent, and thus effects scoring.

An update to paid thereafter terminates any continued reporting of a current status of continued delinquency (e.g., CO), and thus terminates any further damage based on further increase in level of delinquency.

Paying can initially update the period up to the date paid, but terminates further update to show continued delinquency.

Totally seperate and apart from any scoring implications, reporting that a debt was charged-off and continues to remain unpaid has a serious negative implication in any manual review.  It informs others that you have a debt that is delinquent, that the period of delinquency is increasing, and that the creditor has formally determined that the consumer is not likely to pay the debt.  That is the definition of a charge-off.

A creditor, seeing multiple occurences of seriously delinquent debt accompanied by a determination by the prior creditor that the consumer is not going to pay the debt, is likely to be very reluctant to extend credit to that consumer, regardless of their score.

Paying shows at least that the consumer, when finally able, does fulfill their obligation to pay deb that they obligated.

That mitigates the prior determination by other creditors that the consumer is not likely to ever pay the debt.

[Anonymous]

Im a very very simliar boat as the OP, I already settled up with a CC that was charged off within the past 2 weeks. I didnt realize about the pay for delete arguement while I was doing it. 

I was wondering if you guys might have a template for asking the collections/cc company to remove the charge after its been paid off?

sorry to bump the thread

[Anonymous]

Another question, when looking to payoff chargeoffs is it as simple as just calling and requesting to pay it off? Don't want to agree to something or say the wrong thing to hurt myself even more

[thornback]

Yes, just contact them and tell them you'd like to pay the debt owed.  You can ask if it is possible to negotiate a lower settlement amount for the debt, or simply pay it in full.   So long as the original creditor still owns the debt (hasn't sold it to a collection agency), there should be no issue.   All of the creditors you have noted are solid, non-predatory lenders, so you shouldn't need to worry about any potentially unethical practices.  Make sure to request confirmation of payment in writing to keep for your records.   

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@Anonymouswrote:
Another question, when looking to payoff chargeoffs is it as simple as just calling and requesting to pay it off? Don't want to agree to something or say the wrong thing to hurt myself even more

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[thornback]

Pay for delete rarely works with original creditors - which is why I didn't mention it as an option for the OP, especially given the lenders mentioned.  Pay for delete works best with collection agencies.   Same with Goodwilling a charge off with the original creditor -- very few creditors will agree to it, but it has better chances of working than a pay for delete, especially if the charge off is old.    You can do a search of the forums for "PFD" and "Goodwill" --- you should find several templates / examples / methods of both.  Good luck!

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@Anonymouswrote:

Im a very very simliar boat as the OP, I already settled up with a CC that was charged off within the past 2 weeks. I didnt realize about the pay for delete arguement while I was doing it. 

I was wondering if you guys might have a template for asking the collections/cc company to remove the charge after its been paid off?

sorry to bump the thread

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