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02-20-2011 05:53 AM
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
02-20-2011 06:53 AM
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.
02-20-2011 07:12 AM
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!
02-20-2011 07:13 AM - edited 02-20-2011 07:23 AM
(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 learn
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.
02-20-2011 08:00 AM
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!