Re: will paying off a charge off improve score?
10-04-2012 02:31 PM
My understanding is: the CO is a major derogatory and is weighted the same by FICO whether it is PIF or not. However, a settlement is viewed as a negative - still, no diff in FICO scoring. I also understand that FICO basically uses the "CO" for scoring and does not refer to Bal/PIF/Settlement -- a more experienced could verify, please. Where it really comes into play is when a creditor manually reviews; the settlement would be more negative than a PIF. It would be weighted as: CO: PIF, CO: with bal, CO: settlement with settlement being the worse.
I would suggest paying in full or if you can do it, a PFD. If the PFD is not accepted I would PIF (whether via payments or lump sum) the GW then heck out of it for a removal of the CO and/or Tradeline.
Let me explain my situation in hopes it may help you compare it to yours:
I have a charge off unpaid account that is 3 years old. This account still reports 90+ days late each month. Soooo.......if I pay, the creditor can not hit me with late payments anymore. But the amount owed is counting towards my utilization on my revolving credit. Thus by keeping my credit card balances at zero I look like I have a utilization of 7% due to the unpaid balance. If I pay, I will have a zero. Now, paying in my case may stop the recent deliquency category from reprting after a certain time. But I may have to carry an actual balance on my cards so that I have some sort of utilization reporting. The question is, from a return on investment perspective of the score, which is greater, paying or leaving alone?