Closed vs Charged off

[Anonymous]

So Merrick bank told me last week if I made a payment my account would not be charged off. Well I made the payment snd an extra one to now find it out it was closed. It doesn't say charged off though. Is this better? Also credit report is posting this card and a charged off card as revolving lines. If I pay them off does it boost my score.

[Anonymous]

If it says something along the lines of "closed paid as agreed" than that's good. I believe charge off will say something like "closed settled for less". I never had one so I'm not entirely sure.

[RobertEG]

Closing a revolving line of credit simply terminates the ability of the consumer to futher increase the revolving debt by making further charges.

It is done to reduce further risk on the part of the creditor.

Delinquent accounts are routinely closed by the creditor, but that is unrelated to the continued reporting of account payment history or current status as delinquent or non-delinquent.

Reporting of a charge-off is the most extreme reporting of delinquency status, as it both states the account was delinquent and is not expected to be repaid.  Yes, you were fortunate to avoid taking and reporting of a charge-off.

[Newbie2018]

A charge off would be stated as "paid charge off" on your report. If it's just closed and says "paid" you did good and they honored what they said. We're you behind on payments? If so the late payment don't go away I believe.

[Anonymous]

Hi I was really behind 120 days. It says closed by creditor's request. The payments haven't updated yet.

[Newbie2018]

The 120 days late that shows on your CR will remain. When the payment updates it will update to Paid. It wasn't in charge off status yet. I believe most do a charge off when it's 180 days past due. Every company is different. Some charge off after 30 days non payment. You should be clear.

[RobertEG]

Federal regulations generally establish the criterion of  120-days delinquency for installment loans and 180-days delinquent for revolving accounts as a standard for taking a charge-off.  See "Uniform Retail Credit Classification and Account Management" regulations, discussed and published at Fed Reg, Vol 64, No. 27 (February 10, 1999) and updated at Fed Reg, Vol. 65, No. 113 (June 12, 2000)

Creditors can, and do, routinely take charge-offs without reporting that fact to the CRAs.

They may simply continue to report the debt as delinquent (e.g., 180+ late) without adding the fact that it has also been subjected to that accounting measure.

Even when a creditor does report a charge-off, they do not report the actual date they did the accounting, they only report that it was done at some prior point in time. Thus, they can report at any subsequent time.   Once the do report a charge-off, they must, however, also report the DOFD to the CRA within 90 days.

As a consumer, you are primarily concerned with whether or not they decide to report the charge-off, and not with whether they have actually taken that measure.  If the delinquency is over the regulatory limits, chances are that they have or will take that accounting measure, but unless reported to a CRA, is an internal issue for the creditor.