Charge off question

[Anonymous]

I have 3 charge offs totaling $3k. The 3 different CA’s do not have a PFD deal. Will it help my report if I pay and can’t get it removed or is just as bad letting it sit there with a balance????

Convergent Outsourcing -Sprint
Central Control Financial - Med Bill
Ad Astra Recovery Services- payday loan

[JGGM]

If you pay all 3 in full, and those are your only negative items reported, it should help you. While a PFD is the best scenario, paid collections are better than unpaid. 

[Anonymous]

Thanks. For the advice. I’ve seen some success with some people writing GW letters to these CA’s

[Anonymous]

I paid off a old charge off and my credit drop 11 points, so becarful, I still don't understand why it droped.

[RobertEG]

An unpaid debt that has been charged-off is a delinquent debt.

When a creditor reports an update to a CRA that includes a current status of continued delinquency, such as 90-late or charge-off, it explcitly informs the CRA that the effective period of delinquency of the debt has extended up to the date of the updated reporting.

Just as when an account that was previously reported as 60-late is updated to report as 90-late, updated reporting that a charged-off debt remains unpaid effectively "extends" the period of delinquency, and negatively effects scoring.

Paying the debt updates the currrent status to one of non-delinquency, and thus ends and increased negative effect of account delinquency.

Thus, while paying a charged-off debt does not remove the effect of the charge-off per se from your payment history scoring, it does stop the continued and escalating effect of its increasing delinquency status.

Additionally, if the debt is on a revolving account that is still being reported by the OC as having a balance (i.e., the OC still owns the debt, and the debt collector only has assigned collection authority), then paying a CO will also result in the balance on the reporting account with the original creditor being updated to $0, which improves your scoring of % util of that account.

[Anonymous]

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@Anonymous wrote:

I paid off a old charge off and my credit drop 11 points, so becarful, I still don't understand why it droped.

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Possibly because the CA had not updated the report in a long time, and when its updated to paid it "refreshes" it as far as the score model is concerned.

[Cherekas]

@danwash2002, I have 2 chargeoffs that were being reported on my credit files. One was actually a judgement as well. The best thing I could've done (and did) was pay them off. I settled them both and when they reported (one with Discover and the other with BOA) my scores were able to rebound so well. I saw a rebound of almost 45-60 points across all the CRA's. My only regret is I didnt pay them off sooner. They are both over 3 years old now but looking back, I now understand that it suppressed my scores terribly.