I have been in the process of wanting to purchase a home for years. The closer i would get my scores to where I needed them, i've always have this haunting of a creditor behind me that brings me down. I had a vehicle that was totaled in 2014. I had full coverage and gap. However, i was still left with a balance of $5200. This account was charged off around July of 2015. Since then, they've constantly reported month after month that i was 90+ days late. So after ignoring this issue, i applied for my mortgage loan earlier this week and to go through with the process, i must have this debt taken care of. I called, set up a settlement arrangement and weve came to an agreement of $2100. I paid 1200 up front, and will pay 300 a month for three monnths until the debt is gone. In return, they will no longer report monthly that i am late or behind and list the status as settled. Theyve also agreed to remove all late payments reported on my reports since the date of the charge off which is around July of 2015 since theyve been reporting this negative info. I've heard so many different things about paying off old debt but this debt is charged off, but the account is still open and they report monthly towards my reports. Will this help me or hurt me? Currently my scores are TU-675, Exp-645, & Equifax-607. Can i expect an increase? & to be honest, if there no increase, it really would not bother me. I'll just be glad that this negative item has been resolved. I am also dealing with the original creditor, not a collection agency. Help me please.
Until it stops updating and begins to age its going to be depressing your Fico it will the entire time on record as its a CO and once a CO always a CO but as it moves back in time it depresses Fico less and less. You want to see about getting them to totally remove the account from your CR once its settled. I find it strange you owed anything with GAP they are required to pay off in full what your insurance company wont. Welcome to the board
Its tough to say if paying them makes a difference in FICO score, I paid mine, my score went up but I had a lot of things going on at the same time so its hard to say. I do believe that it makes a difference with how you are viewed if your applying for credit and a underwriter does a manual review but that is my guess not fact.