No credit card required
Browse credit cards from a variety of issuers to see if there's a better card for you.
I had 2 remaining charge off/collections that needed to be paid before I can start the USDA process. I paid both about a week ago & I know that once the balances are updated to $0 I will see a boost in my scores because they were impacting my revolving credit. Can I fax proof of payment to the CRAs or will that open up disputes? I just had all of my dispute comments removed so I don't want to open up that can of worms again. Thanks in advance!
I hate to be the bearer of bad news but there is a chance that you could see a drop in your scores if the charge off has not been reporting recently. If they've been reporting every month like clockwork that it's a charge off, your lowered utilization should help you. If possible, try to get both of those accounts goodwill deleted, that will be the optimal result.
Unfortunately, an old charge off with no recent activity showing (say in the past year) will update to paid but will often update the prior months payment status as C/O. This is bad because it triggers the fico algorithm to say you've had a recent late payment even when the update reason is because you've fully satisfied the debt. I have seen this happen first hand to my husband's credit, the drop was significant.
This is why it's recommended to do a wait and see approach and get the loan officer/underwriter request/opinion on whether an account should be paid. (Ideally at closing) Or if you're getting prepared, get things squared away with PFD/GW and some good credit under your belt with 1-2 years pre-app.
Thanks for your input!
I was told by my LO to have these paid off prior to applying. How would I know if it's been reporting...is that the "Status as of" Date? If so it's been reporting both accounts monthly except for on my Transunion the one account is listed as a Collection & on Experian & Equifax it's listed as a factoring company. I have already shot off goodwill letters in hopes that they may delete them. Guess it's the waiting game...
It should be the "date of last activity".
I wouldn't send anything in to the credit bureaus other than a letter from the creditor on letterhead stating the account is a $0 balance, otherwise the credit bureaus probably will just open a dispute because sending in proof of payment isn't going to mean much to them.
Ok, thanks Shane!
When I had the disputes removed from my CR my score dropped 26 points! So sad!! When the collections are being disputed they are not factored into the score and even though they have a zero balance they are now on the CR. I sent GW letters last week, hoping for the best!!
@jerzygirl wrote:
Yes, I already lost an average of 20 points from having my disputes removed! Keeping my fingers crossed that these updates don't make it go down any more. Thanks.
So did I ... but they will rebound. All the best.
@jerzygirl wrote:
Yes, I already lost an average of 20 points from having my disputes removed! Keeping my fingers crossed that these updates don't make it go down any more. Thanks.
Hopefully not. If they've been updating every month, in theory, you shouldn't see another score drop. YMMV, crossing fingers for you that this will be the case and reduces util will bring up the scores.
when all is said and done, paid bad debt looks MUCH better in Underwriting than unpaid!