topic Re: Old charge off question in Rebuilding Your Credit

Old charge off question

Anonymous — Fri, 05 Sep 2008 19:45:11 GMT

My wife and I are looking at buying a home FHA. Our lease will be
up in 10/09. This will give me a year to get my credit score up.
My score is now 540 up from 447 3 months ago. Very excited about
how things are getting closer to a workable score! I just recently
began to pay attention to my credit which I gave up on when I lost
my job in 03'

I have one remaining collection which is an old medical acct. That
shouldn't be too much of a problem to get rid of. $37 co pay from a few years back.

My biggest concern currently is what to do with 3 charge offs that
total about 5 grand. Last activity on all three is feb. 04' I know
they are past SOL where I live in California. When I run the score sim.
it says best action is to pay down the revolving debt. My only revolving debt is
2 cc's with $300 limits each. However the Charge off balances are being factored
in to my utilization.

If I pay/settle those charge off's will my score jump up because of small
amt of utilization. Or am I far enough away that the accounts aren't hurting
my score that badly.

My score is also been driven down by recent lates from my SL and a CC. I was still
in the "my credit is hopeless so it doesn't matter state of mind." It's too bad I didn't find Myfico 6 months ago, I would have never let the recent lates happen. Oh well that's my bad!

Thanks for any help!

-Ryan

Message Edited by hammer192 on 09-05-2008 12:45 PM

Re: Old charge off question

Anonymous — Fri, 05 Sep 2008 22:36:01 GMT

Yes...you score will increase if you pay...because the balances are still being factored into your UTL...and hurting your scores....some will say not to touch them...unless told to..but if your looking for a score increase....paying them will help....and getting the negative notations removed....PFD will not always help on COs because you will lbe losing history...which can in turn lower your scores...if they are past SOL...I would send DV letters....and if they validate....try to set up some agreement with them...to have the lates removed...if you pay...

Re: Old charge off question

DallasLoanGuy — Sat, 06 Sep 2008 01:28:25 GMT

if you didnt need the score increase, i would say to leave them alone until after mortgage.....

but if paying them helps the score, it might be a good idea.

the biggest problem may be that it takes a bunch of your cash reserves....

Re: Old charge off question

Anonymous — Sat, 06 Sep 2008 02:22:09 GMT

Ok the Score Sim says:

best action = (670-710) based on paying down 90-100 perc. of revolving debt over a 24 month period.

My 3 accounts still showing balance with oc (not showing as a collection anywhere) are:

Merrick $1,292

Cap 1 $2,357

Cap 1 $1,756

"Ratio of your revolving balances to your credit limits 143%.

I have a recent cap 1 cc that's a yr old now. no lates on it.

Part of me wants to pick up the phone and make a settlement offer. The other partof me wants to leave it alone and maybe my score will be where it needs to be without any action. Is there anything else that I might want to consider to help sway me in one direction or the other?

Thanks sly and dallas for your help.

Message Edited by hammer192 on 09-05-2008 07:22 PM

Re: Old charge off question

DallasLoanGuy — Sat, 06 Sep 2008 12:30:20 GMT

Do you have any good accounts with high util? Maybe pay them down first to see what you get.

Over 620 = same rate as 850 on fha loans..... you don't have far to go

Re: Old charge off question

Anonymous — Sat, 06 Sep 2008 13:22:15 GMT

I have 3 open revolving accounts:

gemb/mervyns - $200 limit / balance = 0

hsbc- $300 limit / balance = 230

cap 1 - $300 limit / balance = 200

I will pay these off and see if that helps my score. Maybe I should give my score time to climb before taking action on the co's? I have a year before I plan to apply for a home loan.

Re: Old charge off question

DallasLoanGuy — Sat, 06 Sep 2008 14:00:00 GMT

hammer192 wrote:
I have 3 open revolving accounts:
gemb/mervyns -   $200 limit / balance = 0
hsbc-                     $300 limit / balance = 230
cap 1 -                   $300 limit / balance = 200

I will pay these off and see if that helps my score. Maybe I should give my score time to climb before taking action on the co's? I have a year before I plan to apply for a home loan.

good plan

Re: Old charge off question

Anonymous — Sat, 06 Sep 2008 15:04:28 GMT

Not hardly....the COs are reporting a balance...and it make it look like you are over you CL....paying your current one definitely will help...but the big boost will come from the COs...try to get your current ones down to 1-9% UTL....and you'll be good....but work on those COs...there is no difference score wise if they are PIF...or settled...so I would settle if I could...and save yourself the extra money...and hope these accounts were or are not sent to collections....then you would have to deal with the double whammy...of the OC...and the CA reporting....hurting you double...if the accounts were sold...the OC TL MUST show a $0 balance...they you should try to PFD the CAs....but try to work out something with the OC first....GOOD LUCK!!!

Re: Old charge off question

Anonymous — Sat, 06 Sep 2008 15:15:55 GMT

None of these charge offs are showing up as collections on any reports. Could it be possible that they have been sold to collections but the CA's are not reporting? If they were never sold to a CA then I'm good (pay/settle). If they were sold then I might make things worse by checking to find out?

Re: Old charge off question

Anonymous — Sat, 06 Sep 2008 15:17:14 GMT

Anyways it goes...you might want to call the OC and see if they were sold to collections...how old are they???...if they are pretty old....most likely they will be...OCs don't hold on to old COs for long...they write them off..and send them to CAs...

Re: Old charge off question

Anonymous — Sat, 06 Sep 2008 15:22:30 GMT

they are all over 4 years old (past sol) Can I make matters worse by calling to find out?

Re: Old charge off question

Donna1966 — Sat, 06 Sep 2008 16:02:38 GMT

Capitol One is notorious for letting COs set for years and then sending to collections.

It would really suck if you had everthing in order and getting ready to apply and then wham a CA shows up on your credit report and then you are disqualified for over a year to apply.

Re: Old charge off question

Anonymous — Sat, 06 Sep 2008 16:33:19 GMT

If I was to seek out information about the status of the account (if it was sold to a CA) should I write them or use one of the backdoor #'s? Maybe a pfd? The original balance 4 years ago was $700 on 1 account and $500 on the other. Now they are showing balances of $2,500 and $1700. What would be a reasonable offer for the pfd letter on these accounts?

Re: Old charge off question

Anonymous — Sat, 06 Sep 2008 17:54:22 GMT

Interest can compound on a CO...I had one a few months ago that I PIF...I took the very small hit for updating the DOLA...but the CO was reporting lates EVERY month...and the balance was growing...so I did it for me...but NOTHING should update the DOLA...except for a payment...or an agreement to pay...you need to call..like the PP said....it will be bad if it shows up right before...or within the home buying process...call and see....who are the OC's???...

Re: Old charge off question

Anonymous — Sat, 06 Sep 2008 18:02:42 GMT

the original oc's are cap 1 and merrick bank. Should I use a backdoor phone # and see if they were sent to a CA? Thanks for the help, I love this forum!!

Re: Old charge off question

DallasLoanGuy — Sat, 06 Sep 2008 18:16:54 GMT

hammer192 wrote:
they are all over 4 years old (past sol) Can I make matters worse by calling to find out?

you might wake a sleeping giant.

opting out would be a good idea too....

Re: Old charge off question

Anonymous — Sat, 06 Sep 2008 19:40:55 GMT

Good thing is...your not applying until next year...so you can deal with them now...7-7.5 years form the DOFD is when these accounts will fall off...so you need to find that out....I would call to see what was the status of them...not admitting or agreeing to anything though...I know Capital One is a hard on to deal with...I haven't heard much about Merrick Bank....last thing you need is a CA...but like DallasLoanGuy said...Opt out...

Re: Old charge off question

Anonymous — Sun, 07 Sep 2008 15:19:55 GMT

Ok I printed out one of the "opt-out" letters. It asks me to put in the account numbers. DoI list my charge off account numbers? This makes me nervous. Won't that just draw attention to those sleeping giants? Does this prevent them from sending my info to a CA? Thanks

Re: Old charge off question

johnpalley — Tue, 09 Sep 2008 18:45:55 GMT

DallasLoanGuy, are you 100% sure that someone will give you a mortgage with unpaid charge offs? i went to apply at a local bank yesterday and they said every old unpaid charge offs have to be paid. i figured every bank was different so i just wanted to make sure that you were 100% sure? slyhouse08, are you sure that a settlement effects your score the same as a paid in full? i heard someone on this forum say something different. they said that a settlement is looked at the same way as a co but in just makes it current and a paid in full was viewed as alot better.

Re: Old charge off question

Anonymous — Tue, 09 Sep 2008 20:37:03 GMT

Scorewise...a paid/settled CO is the same....it's still a CO...either way...you will reset the DOLA...and make it current....but if you have a manual review of your credit report...the PIF might look better than the settled...but a unpaid CO hurts because the negative balance is still calculated into the UTL...and KILLING scores...it's up to you....