Charge-Off vs. Credit History Length?

[Tetraptych]

My wife and I are getting ready to buy a house next year and are in the process of saving and really scrubbing up our credit. Her credit is OK (about 660 on all three) with no derogatory marks apart from one 90 day late payment and some high balances on two credit cards ($5000 and $1000 limits) that we're in the process of paying down. The $1000 card will be down a zero balance by next summer, while the $5000 card should be below $1500.

Here's where it gets tricky: we noticed on her report that she was still listed as an authorized user on one of her father's card.her father died about four years ago, and the credit card shows as a charge-off with a balance of $397. The account has a 20 year history, while the rest of her accounts that are totally in her name are mostly 8-9 years old. I'm really not sure what the credit limit on the card was, but it was probably fairly high.

Anyway, what I'm really wondering about is the effect it might have on her score. Given that removing a recent charge-off would be a nice increase, but I'm hoping the gain won't be offset by the shorter credit history and possibly lower total balance.

Thanks for the help!

-S

[Revelate]

Doesn't sound like she's hurting in the length of history department anyway: once you get beyond 5ish years AAOA you're just coloring out to the margins anyway, and if she has a bunch of 8 year tradelines losing a 20 year one isn't as big of a deal as it would be to someone like me with a credit history truly established in 12/11, or not even 3 years ago.

The chargeoff on the other hand, that's a non-trivial derogatory.  I'd absolutely want that off of my credit report even with my tradeline status let alone hers (and she's in much better shape than I am).  Between that and the balances being paid down you might break 700 even on a mortgage tri-merge.

TL;DR: airstrike that AU, it's almost assuredly hurting far more than it's helping on her report.

[Tetraptych]

Great to hear, thanks for the info!

[takeshi74]

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@Tetraptych wrote:

Given that removing a recent charge-off would be a nice increase, but I'm hoping the gain won't be offset by the shorter credit history and possibly lower total balance.

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In most cases derogs are going to outweigh account history.  There may be certain situations where the opposite is true but, in general, always do what you can to address derogs.