09-05-2011 07:35 PM
Last year I settled 8 accounts (all credit cards or unsecured lines of credit) by paying less than the full amount. All were settled with the original creditor.
In looking at the "current status" of these on my credit reports:
5 show as "Paid or paying as agreed" (TransUnion) and "Pays account as agreed" (Equifax)
2 show as "Payment after charge off/collection" (TransUnion) and "Bad debt/collection" (Equifax)
1 shows as "Charged off as bad debt" (TransUnion) and "Bad debt/collection" (Equifax)
The descriptions vary but all include "Account paid for less than full balance" or something similar.
Since they were all settled under similar terms at the tie I would have expected them to affect my score similarly, but the difference in "current status" makes me wonder if the 3 "charge off" ones are affecting my score significantly more than the other 5 and whether there is anything I can do about it now.
Thanks in advance!
09-06-2011 01:23 PM
Welcome to the forums!
I'd suggest reading the following:
Credit Scoring 101 - great for knowing what is in your credit score and to see how your score is impacted.
What Steps Do I Take - great for learning the repair process.
and Example letters - PFDs, GWs, DVs, etc.
Don't rely 100% on the desriptions/stati. Any account that reports as a CO or reports as a paid CO (like in your two), are scored equally. FICO looks at them the same. For the 5 that are seemingly good, look at the full 7-yr payment hisotry (only found directly from the CRAs or annualcreditreport) and check to see if there are any lates reporting as those would be hurting too. As a cheat, look at your FICO report on the Accounts summary page. There's a column that shows a red flag. Any of those accounts with a red flag are seen as a negative.
It's not all lost though. There is a step you can take. Some OCs/CAs are open to GW letters (see the examples above). Customize it. I personally like to keep my GW letters short and succinct. I'll include my name, address, prior account number, and any former addresses if I moved so they can find me. I'll say that I was a customer for X years (if X = quite some time). I'll say that I went through a financial problem back in 20XX due to (name whatever...divorce, family emergency, health situation, job loss, etc.) and that you rebounded from it. If you paid on time or paid in full following that crisis, then mention that. Then state that you learned from it and are better from it. If you still have the account and is still open, then mention that you paid on time for the past year + (be specific if over a year). Then specifically ask for whatever it is you want, like "I'm writing today asking for goodwill in removing the reported lates" or "...in removing the account from my three credit reports", or whatever. Sign and mail with a stamp. There are plenty of examples on here.
On wanting things removed, FICO scores heavily on history. If you have any CCs or loans that are among your oldest or the oldest of your accounts, then you wouldn't want it removed. You can actually lose points if the oldest or older than your AAoA. Generally, you wouldn't want it touched.
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