@Anonymous wrote:OC does not sell or transfer to third party collection agencies. They do all their collections inhouse. They "charged off" an account but it still shows a balance and accrues interest. That would be correct, yes? It has good history until 2015. some 30-60 lates then in March 2016 he hit 120 days late and it reported as FP for the first time and his reported as FP since. I thought if a creditor charged off the account it would show a $0 balance, but since they use their own internal collection department then it wouldn't show $0 but the balance due? We are settling this account, finally (thank goodness), in a couple days. Just want to make sure its reporting accurately so the payment reflects the best way possible afterwards.
The account shows up on my husbands credit report as follows"
Snap-On Credit LLC
Acct # XXX
OC: ---
Company sold: --
Account type: installment
Date opened: May 2007
Account Status: closed
Payment status: charge-off
Statues updated: March 2016
Usage: --
Balance: $10,244
Balance updated: Jan 2019
Original Balance: $7,634
Monthly payment: --
Past due amount: $10,244
Highest balance: --
Terms: 48 months
Responsibility: Individual
You are correct - so long as the OC still owns the debt, they may continue to report a balance + accrued interest and update the account on a monthly basis. Once they sell the debt, however, they must report a $0 balance and cease all future reporting. Internal collections is not considered a sale of the account, it is simply a transfer / reassignment.
The balance reporting is factoring into your current overall utilization - so settling this account may immediately benefit your scores depending on how it affects your utilization percentage. It will definitately help over time as once the account is officially paid/closed with a $0 balance, the CO derogatory can begin to age (tho it will continue to hurt til it falls off).
Yea, it should be closed -- because it's a charge-off and you no longer have the ability to use the account.
But, all the data indicates that an unpaid charge-off still factors into overall util.
Any closed account with a balance, to the best of our knowledge, count as 100% utilized because limit is either ignored if still listed, or $0.
Since they just updated in January -- you've already been penalized again. Worst case -- they update a CO status for February as well (and March should you not pay til then) -- but the benefit gained from the elimination of the outstanding balance should exceed any additional damage from the updating of negative info another month. They also may not bother to update additional CO status' and just end that payment status at January, only updating the account status and balance. Either way - payment is definately beneficial to you for both the short and long term. Short term because your mortgage approval partially depends on it; long term becuause the aging of this derogatory will allow your scores to improve with time.
Best of luck with your mortagage!!!