Re: Paid Charge-Off
10-09-2012 01:44 PM
The OC has an obligation under FCRA 623(a)(2) to timely update any reported information so as to maintain the accuracy of their reporting.
Once a debt is paid, they are required to update the current balance to $0.
So there is no question that they are not in compliance.
The significance to the consumer is not in FICO scoring, but rather the fact that anyone doing a manual review of your CR will see an unpaid, delinquent debt.
That's a serious potential negative in any creditor evaluation, so it should be updated.
However, I would not recommend disputing, as it will put a dispute flag on your credit file/report, thus making your FICO scoring essentially useless until the dispute flag is removed. I would send a simple letter to the creditor, reminding them of their obligation under section 623(a)(2) to provide timely update.
If you want to put a little beef in the letter, you might mention a possible complaint to the FTC if not timely corrected.
If that does not work, then maybe file a direct dispute with them, which often dont result in their reporting of a pending dispute flag to the CRA.
Update of current debt balance will not harm scoring or reset the mandatory CR exclusion date, which is based only on the DOFD on the OC account.