At 5 years old, I'd let them ride the last two years.
Both have likely been sold off for pennies on the dollar to a collection agency.
So there's a greater chance. You aren't paying the original creditor anyways.
In two years they'll drop off. And you'll have a clean slate.
Throw that cash in a high yield savings account and let it grow.
24 months will go by in flash!
I've had similar baddies on my credit years back.
You wouldn't know it now.
Amex is undoubtedly the easier to work with of those two creditors. Don't forget about the multitude of other lenders out there either.
@MountainHiker wrote:Hi Everyone
Thank goodness for this forum because it's a great place to learn and grow. Have a couple questions if you don't mind.
I have two unpaid charge offs on my credit file. I'm in the process of deciding if paying them off now or 24 months later would be the best course of action.
I have a $1900 Chase card and a $20K Honda car loan. Both are 5 years old closed and charged off. I owe the money so I definitely want to pay them back. More than likely a lump sum payoff. My question is this, would American Express approve me with a entry level charge or credit card with two older daddies on my credit report. Ordinarily I wouldn't ask this question.
But just recently I went on the American Express website and attempted a pre-approval for their green card. I was denied but....only because my fico score was too low was the response. Current score is in the 650s. But I've heard that a 680 might be that threshold for approval.
What's your opinion on my odds? Have you seen people with older baddies get approved for a entry card?
If so which cards do I have the best chance of getting with a 680 ish score?
Obviously I burnt Chase and I will pay them back. Do you believe Chase or American Express is tougher to get approved for a entry card with older unpaid charge offs on my credit file? Based on the information from this forum it's more than likely I'm on the blacklist with Chase.
Thank you so much for taking the time to read my post. It really does matter.
In general, Amex is less tough than Chase.
And yes, you're definitely on Chase's blacklist.
@MountainHiker wrote:
Although I will say the Capital One SavorOne rewards card and the Venture cards do appear to be a higher end option among the subprime companies. In fact I plan to keep the SavorOne card no matter what.
Another reason is ease of use while traveling internationally. That is a major factor for me.
It seems to be a common misconception CapOne is a "Subprime" lender; the truth is they pretty much cover the spectrum of subprime, prime, and premium cards. Like you I am a fan of my SavorOne card and plan on keeping it regardless of what else I have in my wallet.
@longtimelurker wrote:Then the emotional/moral stuff comes in, you owe the money... But, so what? If it's not collectible. These huge institutions don't miss the money nearly as much as you will if you pay it.
I agree, if they have not already sued and gotten judgements, it's been 5 years, 2 more years isn't that much longer to wait for them to fall off reports forever.
It may be possible to get back in with Chase by settling just the debt owed to them, but there are so many good options in the credit card world that you can go your whole life without a Chase product and not miss anything but maybe 5% cashback at Whole Foods on a no annual fee card.
@longtimelurker wrote:Trigger warning: Not for those with good moral feelings.
SInce this is a sort of financial forum, I suggest approaching this with a "cold" point of view. You are talking about ~ $22K, which is sort of "real money" for many! So, if you repay this fairly large sum of money, what is the return?
1) Possibly at some point an Amex. They are very unlikely to give you a card until you pay them off.
2) Probably much further down the road, if at all, a Chase card.
As @wasCB14 says, there are other good lenders out there who will be happy to give you cards once the COs go from your report, without any need to pay back.
So, unless Amex is really $22K better than the alternatives, on a purely risk/reward analysis, that would suggest not paying back.
Then the emotional/moral stuff comes in, you owe the money... But, so what? If it's not collectible. These huge institutions don't miss the money nearly as much as you will if you pay it.
I want to piggyback off this. While the reporting of the debt may have a time limit, depending on your jurisdiction, simply acknowledging the debt, like trying to negotiate and settle, could restart the SoL. If you live where this is legal, and they don't like your offer, you could end up paying a lot more than you thought. I would leave it alone.
As for Amex, it's not unheard of for them to approve a charge card or cobranded card with scores in the 630s and I've even seen as low as the 610s. Core cards will require you to be about 700. Obviously the current economy will factor in to the decision, but there may be more to the story.
As for derogatories, when Amex approved my first delta, I had something like 12 derogatory accounts with like 7 or 8 charge offs and collections. That was in 2018. The last 4 just fell off in the last few months leaving 2 derogatory accounts due to lates, which will come off within the next year. So, they have no issues approving with derogatories, but they've kept me on a short leash. Chase will approve with older derogatories, but you'll pay with lower limits. Since they HP everything, I've decided to wait until I'm clean to get a decent limit off the bat. I don't want to waste HPs trying to grow a freedom with 500-1000 limit when waiting a year could start me in the 5k range.
@MountainHiker wrote:Because there are two more years remaining before those baddies fall off my credit report, there is a good chance they could be sold to a different collection agency. Wouldn't that be a real risk to take?
The debt being sold to a collection agency doesn't change when it will fall off your credit report.
You've gotten good feedback so far, @MountainHiker.
No one has asked what I thought was the obvious question.
@MountainHiker wrote:I have two unpaid charge offs on my credit file ... I have a $1900 Chase card and a $20K Honda car loan. Both are 5 years old closed and charged off. I owe the money so I definitely want to pay them back ...
Others have assumed that you owe the $20K from the car loan. However, I find this unlikely unless you were way upside down on the loan or you managed to evade repossession of the car. Normally, in a car loan default, the lender will repo the car, sell it, and you'll only be responsible for the difference in debt versus sales price plus any repo and storage fees. So do you somehow actually owe the full $20K???
Also, who financed this car loan? Was it also Chase? AMEX doesn't do auto loans.
Either way, I agree that trying to pay off the charge-offs now could be messy and is best left alone, unfortunately. Water under the bridge, but there are many other lenders out there that will work with you.
I agree with above that AMEX is probably going to go easier on you than Chase. With AMEX cards, the co-branded cards like Delta, Hilton, Marriott are often the easiest to get approved, so you might even stand a chance where you are now. The charge cards (Green-Gold-Platinum) come next, maybe between about 650 to 700 FICO+. And their most difficult underwriting comes on the core revolvers like Blue Cash/Preferred, Everyday/Preferred, Cash Magnet. For those, I'd recommend 700+. Chase, in-general, doesn't do a lot of approvals sub-700 even without baddies. And in your case with Chase charge-offs, it may be quite awhile until they take you back.
