Help! $32 left on a 4.5yr old CC charge-off

[HappySoda]

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@RhubarbPie wrote:

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@john398 wrote:

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@ABuckNow wrote:

Would paying it improve my score?

I don't care about the $32 cash: if there's any chance it would improve my score, I'll pay it.

If there's a chance it'll reset the 7 years it's reported, i won't.

hope that makes sense

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what do you mean by reset? usually the account will be deleted after 7 years

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If the OP pays it, the account will become 'active' again (because there was activity), and the clock may reset so that it will remain on the credit report for 7 years from the date of the final payment.

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Paying off a debt does not reset the amount of time it can report unless you are on some kind of payment plan with the company. If he were to pay the balance in full, my understanding is that it does not reset. I'll wait for others for verification on that, but I'm pretty sure I'm right. There are two clocks - the 7 year reporting clock and the collections "statute of limitations." Nothing, as far as I'm aware can reset the 7 year clock. Paying a partial payment can reset the "collections" clock SOL, but not the 7 year that I'm aware.

You might want to read this before you do anything:

http://www.bankrate.com/finance/debt/6-ways-not-to-reset-old-debt-1.aspx

Seven years after the original default date, all mentions of a debt -- no matter who has bought the debt or when -- have to come off your credit report, says Maxine Sweet, vice president of public education for credit bureau Experian.

According to the Fair Credit Reporting Act, debt collectors can't change the account number and consider it a "new obligation," and they aren't allowed to "re-age" that debt, says Tracy S. Thorleifson, attorney with the Federal Trade Commission. Seven years from the original default date -- that's it, she says.

One exception is judgments. If a creditor sues and gets a court judgment against you, they can keep the judgment on your credit report for seven years or until the judgment expires, says John Ulzheimer, president of consumer education for SmartCredit.com. However, as a matter of practice, credit bureaus keep judgments on a credit report for seven years from the judgment filing date, he says

In other words, while the original obligation and any listings by subsequent collectors will come off within the original seven-year period, the judgment can have its own independent seven-year life span.

[ZB182]

Since it has been 5 years your best option is to wait out the SOL and let it drop from your account. Paying it off now and having it in Paid Off status would let it sit there for another 7 years and potentially do more harm than good. Your only other recourse is to send them a Pay for Delete letter, but again at this age it would have minimal affect on your credit. Your best bet would be to pay off any other debts you may have and lower your total utilization. If you have any late payment history on your account you can also send those company goodwill letters in hope they will remove them.

[RhubarbPie]

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@HappySoda wrote:

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@RhubarbPie wrote:

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@john398 wrote:

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@ABuckNow wrote:

Would paying it improve my score?

I don't care about the $32 cash: if there's any chance it would improve my score, I'll pay it.

If there's a chance it'll reset the 7 years it's reported, i won't.

hope that makes sense

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what do you mean by reset? usually the account will be deleted after 7 years

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If the OP pays it, the account will become 'active' again (because there was activity), and the clock may reset so that it will remain on the credit report for 7 years from the date of the final payment.

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Paying off a debt does not reset the amount of time it can report unless you are on some kind of payment plan with the company. If he were to pay the balance in full, my understanding is that it does not reset. I'll wait for others for verification on that, but I'm pretty sure I'm right.

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Well, Im certainly not the guru on this particular subject as I pay all my bills in full every month, have never had a charge off, collections, late payment, or even a credit card balance that accrued interest (not even for a day). So I certainly can't speak from experience. But I'm pretty sure that if you pay an old charged off account, the account will report as new/recent and will signifigantly drop your score.

[Leadberry]

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@RhubarbPie wrote:

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@HappySoda wrote:

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@RhubarbPie wrote:

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@john398 wrote:

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@ABuckNow wrote:

Would paying it improve my score?

I don't care about the $32 cash: if there's any chance it would improve my score, I'll pay it.

If there's a chance it'll reset the 7 years it's reported, i won't.

hope that makes sense

---

what do you mean by reset? usually the account will be deleted after 7 years

---

If the OP pays it, the account will become 'active' again (because there was activity), and the clock may reset so that it will remain on the credit report for 7 years from the date of the final payment.

---

Paying off a debt does not reset the amount of time it can report unless you are on some kind of payment plan with the company. If he were to pay the balance in full, my understanding is that it does not reset. I'll wait for others for verification on that, but I'm pretty sure I'm right.

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Well, Im certainly not the guru on this particular subject as I pay all my bills in full every month, have never had a charge off, collections, late payment, or even a credit card balance that accrued interest (not even for a day). So I certainly can't speak from experience. But I'm pretty sure that if you pay an old charged off account, the account will report as new/recent and will signifigantly drop your score.

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Yes and no.  Yes, the account would update with recent activity and your score may suffer.  However, the CRTP is based on the DOFD, which is the first date the account went delinquent and was never brought current again.  Changing of the DOFD is called reaging and is illegal.  It can happen every now and then, but it is definitely not normal behavior.

Were I the OP, I would find other ways to provide the necessary score boost now, but after you close on your house I would most definitely pay off the CO, if for no other reason than to get that debt off the books.

[ABuckNow]

I realized after I posted that this probably wasn't the best forum...I don't know of any other quick fixes for a 9 point bump, my debt is low.

I made another post in the more appropriate forum:

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Looking-for-guidance-Need-9-more-points/td-p/...

Thank you all for the replies, it's interesting to see the different views! I'll leave it for now (unless requested by lender otherwise)

Thanks for your time

[DaBears]

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@ABuckNow wrote:

I think I don't understand for how long a credit item can be reported - I'm new to this and learning.

I ttought it was for seven years after the date of last activity - that's all I meant.

What I'm really curious about, would paying this stupid $32 help my score?  It's showing as a current balance on the card...

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Paying the $32 will not give you a score increase cause fico will stll see it a collection only paid. The only way to get a bump in score would be sending them a GW=Good Will letter to get it removed from your credit reports, once the $32 is paid.

[guiness56]

This debt is a CO.  If the balance and the CL were on the CR it would be factored into utilization and impact your score.  While the balance is $32 the CL isn't on your report so it is not impacting your utilization.  The fact that it is a CO is what is hurting you.  Paying it will not help you at all as FICO scores them the same.

Debts are excluded from the CR based on the DoFD.  NOTHING can change that date other than bringing the account current then becoming delinquent again. As this is a closed account, that is not likely to happen.

Just paying the debt will not restart the reporting time.  It could restart the SOL for suing but that would be the only thing that is restarted.

Date of last activity (DOLA) has nothing to do with how long something stays on your credit report.  It has nothing to do with determining the DoFD.

Paying a debt that is older and has not updated in a while could possibly drop your score if you paid it.  It is not supposed to happen that way but it sometimes does.  Paying off a collection should not impact your score but it sometimes does. 

Also, accurately reported information should not be disputed.

[Shogun]

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@guiness56 wrote:

This debt is a CO.  If the balance and the CL were on the CR it would be factored into utilization and impact your score.  While the balance is $32 the CL isn't on your report so it is not impacting your utilization.  The fact that it is a CO is what is hurting you.  Paying it will not help you at all as FICO scores them the same.

Debts are excluded from the CR based on the DoFD.  NOTHING can change that date other than bringing the account current then becoming delinquent again. As this is a closed account, that is not likely to happen.

Just paying the debt will not restart the reporting time.  It could restart the SOL for suing but that would be the only thing that is restarted.

Date of last activity (DOLA) has nothing to do with how long something stays on your credit report.  It has nothing to do with determining the DoFD.

Paying a debt that is older and has not updated in a while could possibly drop your score if you paid it.  It is not supposed to happen that way but it sometimes does.  Paying off a collection should not impact your score but it sometimes does. 

Also, accurately reported information should not be disputed.

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+1