Charge-ff and collection question

[Anonymous]

My wife and I have been working on repairing our credit. We have an old credit card charge-off that has been there for about 3 years with no further action. We were thinking that we may be able to just let it age off (long term) and in the short term not worry about it as it has had no activity in over a year. 

Well, we were contacted by a collection agency (RGS FInancial) saying that they have been assigned the account for collection. They have offered a settlement of 50% of the balance. I called the collection agency to try and avoid it being reported as a new collection and they indicate that they are workign for the original creditor and will not report to credit themselves- that only the original creditor will be reporting anything on this account. They said that if I pay the 50%, the orlginal creditor will update the charge-off to "settled- paid" or something to that effect. 

So, once a credit card company does a charge off, they can still collect themselves? Also, if they update to "paid" will that create a new entry on my report or re-date things resulting in a drop in my credit score?

I am inclined to pay it just to defuse a large problem later. However, if it will reset anything or show up as a new deragatory within the last 12 months (we are trying for a mortgage soon) than I worry about messing with it.  

Thanks! 

[Anonymous]

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@Anonymous wrote:

My wife and I have been working on repairing our credit. We have an old credit card charge-off that has been there for about 3 years with no further action. We were thinking that we may be able to just let it age off (long term) and in the short term not worry about it as it has had no activity in over a year. 

Well, we were contacted by a collection agency (RGS FInancial) saying that they have been assigned the account for collection. They have offered a settlement of 50% of the balance. I called the collection agency to try and avoid it being reported as a new collection and they indicate that they are workign for the original creditor and will not report to credit themselves- that only the original creditor will be reporting anything on this account. They said that if I pay the 50%, the orlginal creditor will update the charge-off to "settled- paid" or something to that effect. 

So, once a credit card company does a charge off, they can still collect themselves? Also, if they update to "paid" will that create a new entry on my report or re-date things resulting in a drop in my credit score?

I am inclined to pay it just to defuse a large problem later. However, if it will reset anything or show up as a new deragatory within the last 12 months (we are trying for a mortgage soon) than I worry about messing with it.  

Thanks! 

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If you are trying for a mortgage 'soon' -meaning prior to the time this would age off - then it will look best if its paid in full. Lender will often balk at unpaid collection items, even if your score is good. "Paid in Full" looks better to a lender than "Paid-Settled". Who was the credit card with? Would you be able to pay in full without too much difficulty?

[Anonymous]

If you want a mortgage- Pay it off! A mortgage lender will look at it more favorably if it is paid. See if they will deleted it once paid. Some won't- but it doesn't hurt to ask.