topic Re: Does this make sense? in Rebuilding Your Credit

Does this make sense?

sharriel — Tue, 11 Jun 2013 15:23:23 GMT

I have 2 CAP1 accounts (1 for $1800 set to come off Jan 2015 and 1 for $1500 set to come off December 2014) . They will not PFD at all. They have offered me 50% settlements on both accounts. I am not in position to PIF but I can pay 50% to settle.

Since these are going to fall off shortly, would it be in my best interest to settle and let them fall off?

I would like a mortgage within 2 years so won't it look better settled instead of unpaid?

Re: Does this make sense?

Anonymous — Tue, 11 Jun 2013 15:25:16 GMT

could always settle and then GW the EO office until they say yes

Re: Does this make sense?

DaBears — Tue, 11 Jun 2013 15:42:47 GMT

Settled or PIF alwys will be better than unpaid. It really depends on the underwriter if he will accept settled as to PIF. Did you pay the OC or a CA?

Re: Does this make sense?

sharriel — Tue, 11 Jun 2013 15:52:26 GMT

I haven't paid yet. It is to the OC Capital 1...they have not sold it yet.

Re: Does this make sense?

Anonymous — Tue, 11 Jun 2013 17:32:30 GMT

@DaBears wrote:
Settled or PIF alwys will be better than unpaid. It really depends on the underwriter if he will accept settled as to PIF. Did you pay the OC or a CA?

Once a debt is settled it is considered paid and the underwriter should not have a problem with that. If he does I would get a different lender.

Re: Does this make sense?

sharriel — Tue, 11 Jun 2013 18:17:53 GMT

OK, thanks! I will go ahead and settle...These are in marked as Charge-Offs...do You think if I settle, it will raise my score at all or would I have to wait for them to drop off to see an increase?

Re: Does this make sense?

Anonymous — Tue, 11 Jun 2013 18:41:23 GMT

If the CL and balance are reporting it should.

Re: Does this make sense?

cwwatts1202 — Tue, 11 Jun 2013 18:49:07 GMT

@sharriel wrote:
OK, thanks! I will go ahead and settle...These are in marked as Charge-Offs...do You think if I settle, it will raise my score at all or would I have to wait for them to drop off to see an increase?

When we settled my husbands FP CO CC they didn't report it as settled at first, they just reported it as a payment and his score jumped like 25 pts bc of his util going down, but once they reported it as settled/closed, he lost 30 pts... so you'll probably gain some pts if it's being factored into your util, but then lose some pts once it's closed. That was our experience anyway.

Re: Does this make sense?

Anonymous — Tue, 11 Jun 2013 20:03:01 GMT

I don't think he should have lost points for the settlement. Are you absolutely sure nothing else happened at the same time.

Re: Does this make sense?

cwwatts1202 — Tue, 11 Jun 2013 20:06:11 GMT

Yes i'm sure. It reported closed/settled and shortly after he lost 30 points. Nothing else was done to his credit, no inquiries, nothing added, no new accts. etc. just this card closing. But i've read in these forums a drop in score is common when cards are closed.

Re: Does this make sense?

Countingpennies — Tue, 11 Jun 2013 20:08:21 GMT

I thought unpaid charge-offs and paid charge-offs scored the same?

Re: Does this make sense?

cwwatts1202 — Tue, 11 Jun 2013 20:16:57 GMT

@Anonymous wrote:
I don't think he should have lost points for the settlement. Are you absolutely sure nothing else happened at the same time.

The sw alert we got for this 30 pt drop also shows the FP account reporting $0 and settled and a Fingerhut inquiry, didn't realize that at the time of the alert, just re checked it. So it was a mix of the inquriy, which was probably 7-8 pts of the drop and the FP card closing. Sucks you pay your debts and lose points for it... should've just paid it down to $5 and left it be!!

Re: Does this make sense?

DaBears — Tue, 11 Jun 2013 20:19:17 GMT

@Countingpennies wrote:
I thought unpaid charge-offs and paid charge-offs scored the same?

If your bal is higher than your CL it is factored into your UTIL which can hurt your score. You can get a score increase by reducing or getting rid of the higher bal on the c/o.

Re: Does this make sense?

Anonymous — Tue, 11 Jun 2013 23:51:28 GMT

@DaBears wrote:
@Countingpennies wrote:
I thought unpaid charge-offs and paid charge-offs scored the same?
If your bal is higher than your CL it is factored into your UTIL which can hurt your score. You can get a score increase by reducing or getting rid of the higher bal on the c/o.

You keep saying this. Your balance does not have to be higher than your CL for it to hurt your score. Any reported balance with a reported CL will be included in utilization. When that balance is 0 your utilization will drop.

Re: Does this make sense?

rckstrscott — Tue, 11 Jun 2013 23:56:36 GMT

@Anonymous wrote:
@DaBears wrote:
@Countingpennies wrote:
I thought unpaid charge-offs and paid charge-offs scored the same?
If your bal is higher than your CL it is factored into your UTIL which can hurt your score. You can get a score increase by reducing or getting rid of the higher bal on the c/o.
You keep saying this. Your balance does not have to be higher than your CL for it to hurt your score. Any reported balance with a reported CL will be included in utilization. When that balance is 0 your utilization will drop.

Yeah, Guiness is 100 percent with this. I had an HSBC charge off, for 677 dollars. The limit was 1200 dollars when it was closed.

What happens is, the $677 still factors against your util, but the $1200 is no longer part of the util. Soooo, if you have 3 credit cards, with 1000 total in limits and a charge off for 677... if those cards have 500 in balance and you have a 677 charge off, you UTIL is 1177 of 1000. If you pay off the charge off it is now 500 of 1000...

So in actuality, regarldess of limit, the charge off is killing util, period, if it has a balance. When paid to 0, it removes that percentage from your overall util, and you get a score bump. This is 100 percent provable, I can show you the reports..haha

-scott

Re: Does this make sense?

Anonymous — Wed, 12 Jun 2013 00:12:38 GMT

Actually both the balance and the CL are factored in untill the balance is 0 then the CL no longer is included.

Re: Does this make sense?

rckstrscott — Wed, 12 Jun 2013 00:14:43 GMT

@Anonymous wrote:
Actually both the balance and the CL are factored in untill the balance is 0 then the CL no longer is included.

No kidding?

Learn something new everyday! But definitely did count in my util because I had over a 20 point increase when it was paid off with no other changes..

-scott

Re: Does this make sense?

sharriel — Wed, 12 Jun 2013 14:39:32 GMT

Then settling these should def make my score go up. Each have a CL of $500 but the balances are showing $1800 & $1500.

Re: Does this make sense?

Anonymous — Wed, 12 Jun 2013 15:58:01 GMT

I was informed that FICO does score a settlement comment on par with the CO. Now, the gain you could get from settling/paying could be evened out by the loss for the settlement and you break even.

Re: Does this make sense?

rckstrscott — Wed, 12 Jun 2013 17:15:54 GMT

@Anonymous wrote:
I was informed that FICO does score a settlement comment on par with the CO. Now, the gain you could get from settling/paying could be evened out by the loss for the settlement and you break even.

I wonder if this is the same across older flavors of scoring, because although I believe you, I did not see see this at all in my personal recovery.. and I was pretty anal in charting, mapping and keeping everything.. I even went back after this post to go over my old reports and scores back to 2010.. I was curious if maybe I was just rusty... haha

I understand the YMMV principal, so in the future I will defer to yours and llecs knowledge on this subject as community leaders, and since your collective experience has helped me countless times, but I still don't know if I buy it this time...

-scott