topic Re: Charge Off Question in Rebuilding Your Credit

Charge Off Question

FicoTron — Sun, 18 Mar 2012 18:41:32 GMT

I had a chargeoff with HSBC that I recently paid in December. It was always listed on my reports as charged off since 2006. When I paid it last month and they updated it on my reports, it shows 180 days late in 7/06 then NR every month since 2006 up until 12/11 they reported it as a new CO. Can they do that? Or do I have a gripe here? It should show as a CO since 2006 and paid in December. Anyone who has any helpful info would be greatly appreciated.

Re: Charge Off Question

FicoTron — Thu, 09 Feb 2012 19:32:43 GMT

This had a major negative effect on my scores as well. It should have just been changed to a paid CO and not had much of an effect at all.

Re: Charge Off Question

esme — Thu, 09 Feb 2012 20:20:12 GMT

Was the charge-off being reported by HSBC? Or a CA? I would try to find out when the DOFD was. If you're saying that the account was reported a being charged-off in 2006, the DOFD is likely at least 6 months prior to the date of charge-off. The length of time the negatives stay on your credit reports are based on the DOFD (7 yrs - 7yrs + 180 days), not the DOLA like some OCs/CAs/CRAs like to make it look like.

Re: Charge Off Question

RobertEG — Thu, 09 Feb 2012 20:28:12 GMT

All of that information is stored in your credit file, so a lot depends upon how the commercial credit report you are viewing chooses to extract and format that data.

Current status is a snapshot of only your most recent delinquency/payment status. It reports your current delinquency status until such time as a payment of the debt occurs, then it reports the payment status.

Payment rating is a snapshot of your last delinquency status. Similar to current status, but does not change when payments are made on the delinquent debt. It is used to record only the last or highest delinquency status prior to its current status

Payment history profile records each delinquency

For reference, following is the progression of the codes recorded for your situation of a paid charge-off.

Account is 150 days late Current status 150-180 days late Payment rating: 150-180 days late Payment history profile: all reported lates

Account is 180 days late Current status 180-210 days late Payment rating: 180-210 days late Payment history profile: all reported lates

Charge-off: Current status: CO Payment rating: 180-210 days late Payment history profile: all reported derogs

Paid: Current status: Paid Payment rating: CO, 180 late

Creditors normally, but not always, repeat all of their prior months reporting and tag on any new derogs each month. So a continued reporting of 180 late is totally proper, and does not necessarily mean it is a new delinquency, or that the level of delinquency has changed.

If your CR now shows 180 late since the CO from 2006, I speculate that the Payment Rating during that time was 180 late, the current status was CO, and when they updated the current status to Paid in December, they did not update the Payment Rating during that period to reflect its additional CO status during that period. That is actually to your benefit, as a CO is a more derogatory status.

Commercial credit reports throw all of these dates out in a jumble, without identification of what specifc status code it represents, or whether it is just an update or a new delinquency. Many disputes over improper reporting are normally nothing more than matters of incomplete or crummy formatting of your CR, and arent usually the result of improper reporting on the part of the creditor. Unfortunately, the lack of clear identification in the CR makes it extremely difficult, if not impossible, to pinpoint actual inaccuracies in reporting by the creditor themselves.

You may have a technical gripe, but I dont believe it would be to your benefit to dispute. The important thing is that your CR reflect the currrent status of Paid, and the current debt balance of $0. That is what creditors will look at.

Re: Charge Off Question

FicoTron — Fri, 10 Feb 2012 05:56:30 GMT

What great insight, thank you. I was just under the impression that paying an old CO wouldn't have a neg effect on my score. It did. Bringing it from 705 to 666. Which is prettyy huge. But is a 666 with a paid CO better than a 705 with an unpaid CO?

Re: Charge Off Question

Anonymous — Fri, 10 Feb 2012 07:09:10 GMT

Doesnt that payment reage the account thus starting the reporting time all over. It had always been my impression that paying an old charge off, while morally good, and perhaps needed for a new mortgage or something had zero effect on credit score and run the risk of resetting the clock.

Just seems like everything i ever read siad the an unpaid charge off or collection vs. A paid charge off or collection has no bearing on score. They are both the same as far as score goes? Curious to know if i have had it wrong all these years

Re: Charge Off Question

MarineVietVet — Fri, 10 Feb 2012 07:20:49 GMT

@Anonymous wrote:
Doesnt that payment reage the account thus starting the reporting time all over. It had always been my impression that paying an old charge off, while morally good, and perhaps needed for a new mortgage or something had zero effect on credit score and run the risk of resetting the clock.

Just seems like everything i ever read siad the an unpaid charge off or collection vs. A paid charge off or collection has no bearing on score. They are both the same as far as score goes? Curious to know if i have had it wrong all these years

While true that collections are scored the same whether paid or unpaid there is one way for a paid CO to help your score.

If a CO'ed credit card is reporting both the balance and the credit limit then that account is factored into your utilization. If you pay it off that will reduce your utilization and hopefully help your score. But this is the only way I know of that a paid CO will help. Remember though that the CO itself will still report even after doing this.

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Re: Charge Off Question

FicoTron — Fri, 10 Feb 2012 17:22:27 GMT

But the clock doesn't restart. The report 7 years from dofd.

Re: Charge Off Question

FicoTron — Fri, 10 Feb 2012 17:51:03 GMT

I just don't think it's being reported right. They considered it a CO in 2006 and wrote it off. It should not be reported as a new CO in 2011 right?

Re: Charge Off Question

FicoTron — Sun, 12 Feb 2012 05:30:48 GMT

Spoke with a senior rep at HSBC, she didnt know her ass from her elbow, still trying to figure out what I should do moving forward.

Re: Charge Off Question

FicoTron — Sun, 04 Mar 2012 05:21:35 GMT

Bumping in hopes of getting some more advice.

Re: Charge Off Question

llecs — Sun, 04 Mar 2012 05:29:00 GMT

I just responded on your other thread, but it appears it's reporting OK based on info provided.

Re: Charge Off Question

FicoTron — Sun, 04 Mar 2012 23:03:07 GMT

Really? So even though it was charged off in 2006, they can make it look like they never considered it a CO until December 2011?

Re: Charge Off Question

llecs — Mon, 05 Mar 2012 02:48:17 GMT

Using your TL as an example, it was a CO in 2006 and still a CO in 2011. They can add lates during that time. The updating is usually due to the updating of the balance when interest is recalculated.

Re: Charge Off Question

Student_Loans_Kill — Mon, 05 Mar 2012 02:53:59 GMT

No it can't be reset for payment. I really wish the mods would address this topic, seems to come up often. I'm about to hire a lawyer to get the final say

Re: Charge Off Question

RobertEG — Mon, 05 Mar 2012 03:12:02 GMT

There is NO question that payment or nonpayment of a debt that was under collection or charged-off has ZERO effect on its CR exclusion date.

That is why congress enacted FCRA 605(c). Its CR exclusion date is 7 years plus 180 days from the date-certain DOFD on the OC account. Period.

The CO itself occured when the creditor adjusted their books. That event does not change based on when it is reported. Reporting date is not the date it was charged-off.

It can be re-reported each month as an update, stating that it remains under that status. That, too, does not alter the CO date.

I am not sure why all the concern about the actual date of the CO?

Re: Charge Off Question

E16 — Mon, 05 Mar 2012 03:57:35 GMT

I understand that the DOFD is pretty much set in stone. It cannot be changed and baddies will indeed fall off after 7.5 years, paid or unpaid. This is the case even when the CA has updated the account after an individual has paid off or has made payments to pay off an account. If people are worrying about CA's restarting the clock, I think the key is to keep track of your actual DOFD and dispute any changes the CA's attempt to make. Also, I would think, paying off an account might throw off the util (if you don't have much revolving) and AAoA. That may have been the cause of a dropped score. PLEASE CORRECT ME IF I'M WRONG.

Re: Charge Off Question

llecs — Mon, 05 Mar 2012 05:44:58 GMT

@E16 wrote:
Also, I would think, paying off an account might throw off the util (if you don't have much revolving) and AAoA. That may have been the cause of a dropped score.

Paying off a CC CO can result in a score decrease if the HSBC CC updated recently (prior to the payoff) and had a low util w/ a low balance and a higher reported CL, and that the HSBC CC helped overall util. Paying it off would eliminate it from CC util causing an increase in overall util.

AAoA would not be impacted since it is still reporting.

Re: Charge Off Question

Anonymous — Mon, 05 Mar 2012 05:52:06 GMT

E16 is right. But in the real world, it seems to reage the account and then it is up to you to fight it. In my opinion, I would have never paid that old debt without a deletion. At this point, I would recommend to the poster that he/she try to contact the correct party at HSBC and not some rep. I would call back the collections rep and talk to them or write to the address listed in credit report. Ask for the deletion. Don't know if it is too late to take back the payment, but at least ask them to correct the report to how you would like it listed.

Re: Charge Off Question

FicoTron — Mon, 05 Mar 2012 15:49:56 GMT

I wish it were that easy. And this CO isn't from a CC, it is from a rapid refund loan from H&R Block from when I did my taxes in 2006 for $443. I don't know if that's makes a difference in how it impacts my report when it is looked at.