CO- should I pay it or leave it alone?

[Anonymous]

I need some advice....

We are trying to qualify for a home. All of our derogs/delinquents/CO are 2+ years old and paid in full except 1. 

AmEx is reporting a $1247 balance that was charged off 12/09/2017. The monthly payment info shows "NR" for every month since. 

My fear is that if we pay it off AmEx will do what they did with another account and report CO and update the account as PAID with a date of 05/13/2020 and the score will drop because I paid an account that was a 2 1/2 year old CO. AND... it will restart the 7 year clock on the account....

Do I understand this correctly or am I wrong? 

Thanks in advance. 

Nikki 

[Anonymous]

I definitely don't know as much as most on here but from what I understand, mortgage lenders will require that it be paid off. 

Also, it won't restart the clock on the account. It's 7 years from date of the original default. 

[Anonymous]

I guess the real question is if the impact on credit utilization (total available GOOD credit is only $800) will outweigh any negatives that new activity might cause?

[hpotterfan77]

Hi.  Mortgage underwriter here.  Depending on the type of mortgage you are going to get, you "may" be required to pay it off because it's over $250.00.  Some programs require all derog credit to be paid and some don't.  I don't know about the resetting the 7 year closing.  Your date of delinquency isn't changing, only when you paid it.   I'm sure someone on here with more knowledge can enlighten you with that one.  

[Anonymous]

Ya...the & year reset wasn't exacylt what I meant. The recent history is. My Amex account was basically the same information with a higher balance. When I completed the settlement they reported the account as a charge off and changed the balance to 0 but my score dropped 30 points. 

side note....I HATE a system that rewards you for not paying by punishing you for attempting to do the right thing. ....

[Anonymous]

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@Anonymous wrote:

Ya...the & year reset wasn't exacylt what I meant. The recent history is. My Amex account was basically the same information with a higher balance. When I completed the settlement they reported the account as a charge off and changed the balance to 0 but my score dropped 30 points. 

side note....I HATE a system that rewards you for not paying by punishing you for attempting to do the right thing. ...

I don't get where you are being punished for doing the right thing.  If you did the right thing, there wouldn't be a charge off.  I don't know your circumstances and am not judging you, but this was not random.

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[Anonymous]

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"I don't get where you are being punished for doing the right thing.  If you did the right thing, there wouldn't be a charge off.  I don't know your circumstances and am not judging you, but this was not random."

I should have been more clear. I AM absolutely responsible for my current credit situation. I CHOSE to adopt my daughter and I CHOSE to run up the debt to do it. HANDS DOWN- my fault.

I also have spent the last three years working with the 5 accounts that I neglected in an attempt to make restitution. One of those accounts I thought was truely being helpful. They offered to charge me "just the prinicipal" on the account..worked out to about three-quarters. 

My situation -

30 days late on a CC payment in April of 2016 (clock starts)

Settlement reached in Jan of 2017. The CC company started reporting the payments and showed me current. (Clock stops)

Settlement paid in full in August of 2019 as agreed- never late, account reflects as closed with a 0 balance

August 2019 payment reflects "CO" (Clock starts again!)

So...if I had walked away from the debt and made no attempts to make things right....7 1/2 years from May (ish) 2016 would be the end of 2023

or...in my case, accepting the offer and paying it out restarted the clock and 7 1/2 years from August 2019 makes it the beginning of 2027? 

My debt. My choices. My ignorance that reaching a settlement was potentially WORSE than leaving it alone. 

(and ya...that came off as judgy. Kinda like "I don't mean to offend.." is always offensive.)

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[SouthJamaica]

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@Anonymous wrote:

I need some advice....

We are trying to qualify for a home. All of our derogs/delinquents/CO are 2+ years old and paid in full except 1. 

AmEx is reporting a $1247 balance that was charged off 12/09/2017. The monthly payment info shows "NR" for every month since. 

My fear is that if we pay it off AmEx will do what they did with another account and report CO and update the account as PAID with a date of 05/13/2020 and the score will drop because I paid an account that was a 2 1/2 year old CO. AND... it will restart the 7 year clock on the account....

Do I understand this correctly or am I wrong? 

Thanks in advance. 

Nikki 

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You should definitely pay it off.

[Anonymous]

Ya....that is what I'm thinking. Come this far.

[coreysw12]

The date that the last reporting was isn't NEARLY as relevant as the fact that it was last reported as being unpaid.

The fact that it's unpaid is 20x more relevant than if the reporting date is updated. Maybe 50x more relevant.

It needs to get paid.

FWIW, I had 8 unpaid creditors a couple years ago. My scores were in the 400's. Many of those creditors hadn't updated my credit file in months or years; didn't matter, because the credit file was showing as unpaid. I paid them all off at once, and even though those "dormant" accounts got fresh new updates, my scores skyrocketed 200+ points in a month. Having unpaid delinquent accounts is a credit killer, plain and simple. Not only is paying it going to look good to your underwriter, it might even boost your scores enough to get you a better interest rate. If you owed amex like $80k, I might have a different opinion, but for $1200 it's a no brainer, you need to pay it so you have a clean report.