Can a tradeline update cause a large credit score drop?

[Anonymous]

I recently checked my credit scores as I usually do once a month, and I noticed that my Equifax score dropped by 73 points. Absolutely nothing on my report has changed. I have no late payments, and my utilization is still at 5%. The only thing that I can see that may have caused it was a "Tradeline update".  I didn't open a new line it just updated a auto loan account from 2012 that I owe $3000 on. It is a charge off from cap one auto finance.  I'm really confused, and upset because I've been trying really hard to build up my credit. I was at 722 score, and now it's at 649 :/ 

[RobertEG]

If you do have an old account from 2012 that was charged-off and remains unpaid, you do have a delinquent account.

A creditor could, for example, report a continued monthly delinquency of 180+ days late, or report that the account remains under a charge-off status and is still unpaid.

That is the postive reporting that the account is and remains delinquent up to the date of the updated reporting.

Thus, it is treated by FICO as effectively being an extended (longer) delinquency, and affects scoring.

Until a charged-off account is paid, thus terminating its delinquency status, updated reporting can thus have an negative impact on scoring, just as reporting of an extended "new" monthly delinquency of 180+ late can extend the effect of the payment history delinquency.

If you pay the CO, then that will terminate any "extension" of the current delinquency status, and thus permit the CO to begin to age in scoring impact.

[Anonymous]

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@Anonymous wrote:

I recently checked my credit scores as I usually do once a month, and I noticed that my Equifax score dropped by 73 points. Absolutely nothing on my report has changed. I have no late payments, and my utilization is still at 5%. The only thing that I can see that may have caused it was a "Tradeline update".  I didn't open a new line it just updated a auto loan account from 2012 that I owe $3000 on. It is a charge off from cap one auto finance.  I'm really confused, and upset because I've been trying really hard to build up my credit. I was at 722 score, and now it's at 649 :/ 

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They must have updated the date on the charge-off making it look recent, thus causing the score drop. Did they by any change add a comment to the chare=off.

[RobertEG]

Creditors do not report the date they took a charge-off to the CRAs.

The date reported is only the date that they chose to notify the CRA that they have, at some prior point in time, taken that accounting measure.

Once a credtior has chosen to report that they have taken a charge-off, the only required date that must then be reported is the DOFD, which they are required to then report to the CRA no later than 90 days after reporting of the CO.

The "update" notifies the CRA that the debt remains unpaid, and thus continues to have a delinquency status that has extended.