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Which is better?

Member

Which is better?

I currently have an account that has been charged off as bad debt, and is due to fall off my report in July/August of this year.  If I repay the account in full, or make a payment plan agreement with the creditor, does that mean that the account will stay on my report for an additional 7 years?  I'm assuming that it's better to have the account paid off in full and request that they report it as so with the reporting agencies, but is there really a benefit to this in the eyes of creditors who check my report between now and the time it falls off (if it does fall off)?

 

EQ 639 TU 649

Starting (Feb 2011): EQ 639 TU 649 EX 585
Current (March 2011): EQ 671 TU 720 EX 610
Message 1 of 5
4 REPLIES
Regular Contributor

Re: Which is better?

If it is going to fall off in 5 months, your best bet would probably be to let it be and let it fall off (unless they are about to sue you or something like that, but if its falling off so soon, you are probably outside of the SOL.

 

Paying it in full, settled for less than the amount, etc will all continue to hurt your credit score.  The reason is because the FICO model is designed to predict risk, so you have defaulted, and the damage has already been done.  Paying it in full would help if a company did a manual review, but it wouldn't help your fico score.  Paying it also won't reset the date it falls off.

 

If you are going to pay it, then you want to get them to agree (in writing) to do a PFD (pay for delete).  What that means is you pay it, either in full or an agreed upon amount, and they delete it off your reports. 

 

So why do you want to pay this with it falling off so soon?  Unless you need to close on a house or a car very soon, I think your best bed is to not wake sleeping giants.

Message 2 of 5
Member

Re: Which is better?

Thanks....I was thinking of just letting it fall off as well.  Made sense to me, but I wasn't sure my thinking was accurate!  Smiley Happy

Starting (Feb 2011): EQ 639 TU 649 EX 585
Current (March 2011): EQ 671 TU 720 EX 610
Message 3 of 5
Senior Contributor

Re: Which is better?

(CRTP) Credit Reporting Time Period  is the length of time an item can remain on your CR.

The time is calculated based on Date of First Default (DoFD).This time varies by different items.   

 

Charge offs (CO) and collection agencey (CA) can remain on your CR up to 7 1/2 yrs from the OC's DoFD.

 

Paying the debt will  look good on a manual review, but will NOT add 7 more years to report.

 

BTW, Welcome to the forums, You have came to the right place to learnSmiley Wink

 

ETA...Just because the debt will not be on your CR any longer, doesnt mean they will stop trying to collect.  

Also check your states statue of limitations of a debt, so you will know if you are out of the woods, of them taking you to court.                                                         

FICO's May 2015 EQ764 ~~Live below your means and always keep an emergency fund -Love Everybody ~ Big Kenny ~ Big and Rich ~~~~~Credit Scoring 101 - Common Abbreviations - Freq Req Threads - Free Credit Reports - What Steps Do I Take?DV? PFD?
Message 4 of 5
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Member

Re: Which is better?

I'm not worried about the attempt to continue to collect.  That's fine.  I'm not worried about the repayment...I'm more concerned about figuring out the best way to improve my credit scores which as of right now appears to be by paying down my current balances, and continue to pay on time.  My only concern about the charge off dropping is that my longest standing account will also be dropped.  Let's see what happens in July/August.

 

Based on what I can find, the SOL for my state is 6 years...looks like I'm out of the woods on that one.

 

Thanks for the support and info!

 

 

Starting (Feb 2011): EQ 639 TU 649 EX 585
Current (March 2011): EQ 671 TU 720 EX 610
Message 5 of 5