topic Re: Score drop in Rebuilding Your Credit

Score drop

jonjohn — Sat, 21 Jan 2012 22:50:26 GMT

Ok.... I got an alert today that my EQ score dropped from 647 to 629!!!!!!! Not happy here.

I paid off a Dell acct via settlement at a lower amount. This was Dec 7th. My credit report was update and it actually went up.

Yesterday I pulled a report and it showed I still owed Dell $68 . I paid it off via settlement.

I called Dell. They said that the can't take the amount down to zero?????? What?????

I paid it off via settlement. I understand that the "remaining balance" will show as a charge off. But, they are reporting that I have a past due balance of $68.... I DON'T.

I filed a dispute yesterday as well.. Today, I get a drop as a result.. Why would my score drop because I disputed it.

They reported it AGAIN as $68 past due.

Help!!!

Re: Score drop

RobertEG — Sun, 22 Jan 2012 00:37:39 GMT

They have no option, if the payment satisfied the debt, regardless of whether satisfied by paying the full amount or less than the full amount, to update your CR in two ways.

They must report the current status as paid. There is no such thing as a current status of paid for less.

They must update the current balance to $0. You have no more debt with them.

The fact of payment for less is separately recorded by way of a special comment code, and has NO effect on reporting of either the current status or the current debt balance.

I would file a direct dispute with them under FCRA 623(a)(8) and put them under a 30-day period to complete an investigation of your dispute, and report the results back to you.

Do NOT mention your prior dispute through the CRA in your direct dispute, as you dont want to raise the issue of a second dispute that they might dismiss as frivoulous or irrelevant.

Re: Score drop

jonjohn — Sun, 22 Jan 2012 01:01:16 GMT

Thanks for the info.... I am under the gun here.

I am trying to purchase my lease out in March (end) and I want this gone.

I have a letter stating that I paid them "less than the amount" , but it doesn't say "0" balance. However, when I talk to them they tell me I have a zero balance... I am sooooo confused by what they are doing. But, an 18 point drop hurts... OUCH!!! LOL

Re: Score drop

Anonymous — Sun, 22 Jan 2012 01:15:07 GMT

It'll go back up.

Re: Score drop

jonjohn — Sun, 22 Jan 2012 01:38:10 GMT

I hope... That sure took the wind out of my sails... lol

Re: Score drop

jonjohn — Sun, 22 Jan 2012 02:27:20 GMT

Sorry, but I am naive to this.. How do I file an FCRA 623(a)(8?

Re: Score drop

llecs — Sun, 22 Jan 2012 05:34:40 GMT

@jonjohn wrote:
Why would my score drop because I disputed it.......They reported it AGAIN as $68 past due.

Does is show a CL within the TL on your CR? If so, even if closed, it still factors into your CC utilization. Basically you have a CC with $68 on a CL of whatever. Once disputed, that component is removed from FICO scoring. You might be eliminating a very low utilized CC causing your overall CC util to increase. If the balance goes to $0, then it's removed forever from utilization purposes. If the dispute is verified, then I predict your score will rebound. If the dispute results in a $0 balance, then I don't see the score rebounding. Now this isn't to say that manybe something else caused the drop.

Re: Score drop

beb86 — Sun, 22 Jan 2012 06:38:01 GMT

@jonjohn wrote:
Ok.... I got an alert today that my EQ score dropped from 647 to 629!!!!!!! Not happy here.
I paid off a Dell acct via settlement at a lower amount. This was Dec 7th. My credit report was update and it actually went up.
Yesterday I pulled a report and it showed I still owed Dell $68 . I paid it off via settlement.
I called Dell. They said that the can't take the amount down to zero?????? What?????
I paid it off via settlement. I understand that the "remaining balance" will show as a charge off. But, they are reporting that I have a past due balance of $68.... I DON'T.
I filed a dispute yesterday as well.. Today, I get a drop as a result.. Why would my score drop because I disputed it.
They reported it AGAIN as $68 past due.
Help!!!

if you settle a debt you have SETTLED THE DEBT therefore no debt.

Re: Score drop

jonjohn — Sun, 22 Jan 2012 07:23:26 GMT

llecs, you have me totally confused.. lol

Here is the deal. I had an account with Dell with a $1,500 credit limit from a computer that I purchased. Things got tough and "someone" wasn't getting paid. Unfortunately, it was Dell. Now, with the interest and what not the balance went up to $2,500 ish. It was charged off. I got a "settlement" offer and accepted at $1,354.00. I paid them that amount in full. My credit score was updated BUT still showing I had a "past due" balance of $68 and my credit score went up. I called Dell and asked why it showed a balance of $68 still owing. I was told that I will adjust over the weekend. I was then told by another rep that I don't owe anything, but they cannot remove the $68 as it was a settled amount for less than was owed. ????? I explained that the "remainder" my still show as charged off/settled for less or whatever, but I shouldn't be showing a past due balance. It is NO LONGER past due in my eyes. I settled with the amount that they offered. I filed a dispute. It showed that it was "newly updated" but still owing $68. It says in the "notes' that "Consumer dispute re-investigation in process"..... "Amount in high credit is original charge off amount"

That is what is listed on the alert. I have nothing else on my CR that would do that. Nothing is late, nothing is in collections, I didn't apply for any credit, etc.

So, it had to be that. I just want to know WHY it keeps showing past due and they won't take it off.

Am I missing something here???? LOL

Re: Score drop

llecs — Sun, 22 Jan 2012 13:59:06 GMT

@jonjohn wrote:
llecs, you have me totally confused.. lol

Here is the deal. I had an account with Dell with a $1,500 credit limit from a computer that I purchased. Things got tough and "someone" wasn't getting paid. Unfortunately, it was Dell. Now, with the interest and what not the balance went up to $2,500 ish. It was charged off. I got a "settlement" offer and accepted at $1,354.00. I paid them that amount in full. My credit score was updated BUT still showing I had a "past due" balance of $68 and my credit score went up. I called Dell and asked why it showed a balance of $68 still owing. I was told that I will adjust over the weekend. I was then told by another rep that I don't owe anything, but they cannot remove the $68 as it was a settled amount for less than was owed. ????? I explained that the "remainder" my still show as charged off/settled for less or whatever, but I shouldn't be showing a past due balance. It is NO LONGER past due in my eyes. I settled with the amount that they offered. I filed a dispute. It showed that it was "newly updated" but still owing $68. It says in the "notes' that "Consumer dispute re-investigation in process"..... "Amount in high credit is original charge off amount"
That is what is listed on the alert. I have nothing else on my CR that would do that. Nothing is late, nothing is in collections, I didn't apply for any credit, etc.
So, it had to be that. I just want to know WHY it keeps showing past due and they won't take it off.
Am I missing something here???? LOL

If you had the balance go to $2500 on a $1500 CL, then you were over the limit with a CC util of 167%. When you settled and they misreported a balance of $68 (should have been $0), your new CC util would have dropped to $4.5%. At some point in time, you likely would have received a modest FICO gain due to the util alone. If this was the only CC on your CR reporting over the limit, then you would have had a nice gain.

Then you disputed (rightfully so) and FICO now ignores that $1432 in available credit, or more appropriately said, it ignores a low util CC since it doesn't score avail. credit. FICO will still score the util on CCs even if charged-off and closed. But once the dispute comment appears, it'll ignore the balance and CL. If your CC util on your other cards are higher than the 4.5%, or you have no other CCs, then you would experience a score drop.

If the dispute is verified, then your score will bounce back. If the balance goes to $0, the drop would remain. If the TL is deleted all together as a result of the dispute, then YMMV solely based on the age of the TL in relation to your AAoA (util and the baddie aspects are moot because they are being ignored in a dispute and they'd be ignored if deleted).

Score aside, it shouldn't report with $68. And their answer to not removing the $68 is baloney. IMO, you were right to dispute, though, if in a similar situation, send a settlement letter with the dispute. If the settlement was verbal, there's the chance they might forget about the arrangement. Also, I don't know when you paid, but always give a creditor a chance to update on their own before disputing. If after a month I still saw $68, I would have disputed it myself. That $68 likely equals delayed interest from the previous billing cycle.

Re: Score drop

jonjohn — Sun, 22 Jan 2012 18:07:52 GMT

"If the dispute is verified, then your score will bounce back. If the balance goes to $0 the drop will remain"

This is the part that I dont' understand. My dispute is that is should be $0 not $68?????????

Sorry, but I am really confused. I thought I was doing a good thing by settling....

Re: Score drop

jonjohn — Sun, 22 Jan 2012 18:13:40 GMT

On my "credit at a glance" section of the EQ and TU fico report it show $68 past due on 1 account.

Under the account itself it says

Largest past balance $2,256. It doesn't show a "limit"

Balance: $68

Current Status: Bad debt/ collection

Past Due Amount: $68

Re: Score drop

llecs — Mon, 23 Jan 2012 05:31:25 GMT

Double check to make sure there is no CL. If absent, then look on your FICO report to see if utilization is shown on pages 2 or 3. I'd do some reverse math to see if this CC factored into CC util. Sometimes the "high balance" is substituted for the CL.

All COs factor into CC util, so as long as a CL (or high balance) reports and the balance isn't $0.

All $0 balance closed CCs are removed from util.

During a dispute, FICO ignores the balance and CL (or high balance) and payment history on OC accounts.

Here's how your score could have played out....

It reports at or near your CL or high balance, score is taking a beating.

You settle and they report to $68. Because it is at $68, the util on this card drops and likely you would have seen a bump at some point.

A dispute comment appears. FICO ignores the balance and CL and this is removed from scoring per CC util.

Since FICO ignores it, ASSUMING you have a higher util on your remaining CCs or you have no CCs, utilization takes a major hit. Your score drops because this $68/high balance had helped your overall util. Now it isn't scored and your util spikes.

Post dispute:

If the dispute is verified, the $68 and high balance or CL are again scored. Score rebounds.

If the dispute results in $0 as an update, then this CC is forever removed from utilization. Your score will not increase because it is still a charge-off. There might be a slight chance of having an additional TL report $0, but a paid CO is equally as bad as an unpaid one, per FICO.

If the dispute results in a deletion, the absence of this CC means util remains unchanged and because FICO ignores the payment history during the dispute, you won't see an increase from where you are now. There is a chance for a score change due to changes in AAoA. If this is your oldest, you could see a further drop. If youngest, you could see a gain.

Remember, getting a charge-off to report $0 won't change its status. It's still a CO.

_______________

Ideally, the best route to take is a PFD. But there was no guarantee that they'd accept one anyway. And had you waited for them to accept one, there's a chance they could sell it to a CA or sue. And under a manual review, it's better to have a $0 balance than a non-$0 balance.

___

And all of the above hinges on nothing else happening on your CR.

Re: Score drop

jonjohn — Tue, 24 Jan 2012 03:13:44 GMT

Thank you so much for your input.. It's a bit hard for me to understand, but after about 5 times... I get it!!! lol

I was thinking of a PFD myself. The charge off amount is now $802 of the original $2,256. I paid them $1,354.

No matter what at this point it will be taken out of my CC util. I assume. But, still showing settled/charge off.

If I try a PDF and they accept, will it smack my CS again, or remain where it is?

Re: Score drop

jonjohn — Tue, 24 Jan 2012 17:46:44 GMT

Another alert today! It was adjusted to $0 balance and $0 past due, BUT.......... It dropped my CS 4 more points to 625.. I went from 647 to 625!!!!! NOT HAPPY!!!!!! You do right by settling the debt and it screws you......