On time, paid of Discover, and Equifax score dropped 26 points! WHY??!!!

[Thejumpsuitman]

I was livid last night to see that despite my settling with Discover Card and initiating a dispute over the categorization of another old neg. account (paid off years ago), AND paying my mortgage on time, my Equifax credit score dropped from 634 to 621 to 608!  Why on earth would this have happened?  Does filing a dispute cause a credit score drop???  Does settling an old written-off debt hurt your credit?  It seems I am being punished for doing the right things!  Can anyone out there explain this illogic to me?  Thanks.

[Thejumpsuitman]

I am new here, and have only recently re-entered the land of the living after not caring about my decimated credit score for years.  After reading some other posts, it sounds like I may have been re-bucketed???  Does that sound right?  An old Discover charge-off was settled, that's the major change that took place. 

[llecs]

You would only be re-bucketed if that CO went away completely. I'm guessing that the dispute could have caused the initial drop. The final drop, assuming nothing else happened to your reports, could have been caused by the date change on the "reported date" or the DOLA to the day or month you paid the account. FICO is likely reading this as a newer baddie and that could very well do that. A "settled" account with that mention on your CRs is just as bad as a CO in lenders' and FICO's eyes.

You could GW the OC and ask them to remove those comments. Comments may include "charge-off", "settled", "settled for less than full", "was a charge-off" or the like.

[Thejumpsuitman]

Thanks for the reply.  The Discover card was already listed as a charge-off, and still is.  So that must not be it.  There was a notation that Discover did some kind of reporting, but no numbers have changed.  I settled with them  in full for less than the original amount thinking this would help by removing the balance still owed.  Did I screw myself up?  You reminded me that a collection did drop off, but it did so last month, and my score went from 618 to 634.  It is very frustrating to do the "right thing" and be punished for it, if that's the case.