Score drop

[jonjohn]

"If the dispute is verified, then your score will bounce back. If the balance goes to $0 the drop will remain"

 This is the part that I dont' understand. My dispute is that is should be $0 not $68?????????

Sorry, but I am really confused. I thought I was doing a good thing by settling....

[jonjohn]

On my "credit at a glance" section of the EQ and TU fico report it show $68 past due on 1 account.

Under the account itself it says

Largest past balance $2,256. It doesn't show a "limit"

Balance: $68

Current Status: Bad debt/ collection

Past Due Amount: $68

[llecs]

Double check to make sure there is no CL. If absent, then look on your FICO report to see if utilization is shown on pages 2 or 3. I'd do some reverse math to see if this CC factored into CC util. Sometimes the "high balance" is substituted for the CL.

All COs factor into CC util, so as long as a CL (or high balance) reports and the balance isn't $0.

All $0 balance closed CCs are removed from util.

During a dispute, FICO ignores the balance and CL (or high balance) and payment history on OC accounts.

Here's how your score could have played out....

It reports at or near your CL or high balance, score is taking a beating.

You settle and they report to $68. Because it is at $68, the util on this card drops and likely you would have seen a bump at some point.

A dispute comment appears. FICO ignores the balance and CL and this is removed from scoring per CC util.

Since FICO ignores it, ASSUMING you have a higher util on your remaining CCs or you have no CCs, utilization takes a major hit. Your score drops because this $68/high balance had helped your overall util. Now it isn't scored and your util spikes.

Post dispute:

If the dispute is verified, the $68 and high balance or CL are again scored. Score rebounds.

If the dispute results in $0 as an update, then this CC is forever removed from utilization. Your score will not increase because it is still a charge-off. There might be a slight chance of having an additional TL report $0, but a paid CO is equally as bad as an unpaid one, per FICO.

If the dispute results in a deletion, the absence of this CC means util remains unchanged and because FICO ignores the payment history during the dispute, you won't see an increase from where you are now. There is a chance for a score change due to changes in AAoA. If this is your oldest, you could see a further drop. If youngest, you could see a gain.

Remember, getting a charge-off to report $0 won't change its status. It's still a CO.

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Ideally, the best route to take is a PFD. But there was no guarantee that they'd accept one anyway. And had you waited for them to accept one, there's a chance they could sell it to a CA or sue. And under a manual review, it's better to have a $0 balance than a non-$0 balance. 

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And all of the above hinges on nothing else happening on your CR.

[jonjohn]

Thank you so much for your input.. It's a bit hard for me to understand, but after about 5 times... I get it!!! lol

I was thinking of a PFD myself. The charge off amount is now $802 of the original $2,256. I paid them $1,354.

No matter what at this point it will be taken out of my CC util. I assume. But, still showing settled/charge off.

If I try a PDF and they accept, will it smack my CS again, or remain where it is?

[jonjohn]

Another alert today! It was adjusted to $0 balance and $0 past due, BUT.......... It dropped my CS 4 more points to 625.. I went from 647 to 625!!!!! NOT HAPPY!!!!!! You do right by settling the debt and it screws you......