Charge Off Question

[FicoTron]

I had a chargeoff with HSBC that I recently paid in December. It was always listed on my reports as charged off since 2006. When I paid it last month and they updated it on my reports, it shows 180 days late in 7/06 then NR every month since 2006 up until 12/11 they reported it as a new CO. Can they do that? Or do I have a gripe here? It should show as a CO since 2006 and paid in December. Anyone who has any helpful info would be greatly appreciated.

[FicoTron]

This had a major negative effect on my scores as well. It should have just been changed to a paid CO and not had much of an effect at all.

[esme]

Was the charge-off being reported by HSBC? Or a CA? I would try to find out when the DOFD was. If you're saying that the account was reported a being charged-off in 2006, the DOFD is likely at least 6 months prior to the date of charge-off. The length of time the negatives stay on your credit reports are based on the DOFD (7 yrs - 7yrs + 180 days), not the DOLA like some OCs/CAs/CRAs like to make it look like.

[RobertEG]

All of that information is stored in your credit file, so a lot depends upon how the commercial credit report you are viewing chooses to extract and format that data.

Current status is a snapshot of only your most recent delinquency/payment status.  It reports your current delinquency status until such time as a payment of the debt occurs, then it reports the payment status.

Payment rating is a snapshot of your last delinquency status.  Similar to current status, but does not change when payments are made on the delinquent debt. It is used to record only the last or highest delinquency status prior to its current status

Payment history profile records each delinquency

For reference, following is the progression of the codes recorded for your situation of a paid charge-off.

Account is 150 days late     Current status 150-180 days late       Payment rating:  150-180 days late     Payment history profile:  all reported lates

Account is 180 days late     Current status 180-210 days late       Payment rating: 180-210 days late      Payment history profile: all reported lates

Charge-off:                          Current status: CO                             Payment rating: 180-210 days late      Payment history profile: all reported derogs

Paid:                                    Current status:  Paid                           Payment rating: CO, 180 late

Creditors normally, but not always, repeat all of their prior months reporting and tag on any new derogs each month.  So a continued reporting of 180 late is totally proper, and does not necessarily mean it is a new delinquency, or that the level of delinquency has changed.

If your CR now shows 180 late since the CO from 2006, I speculate that the Payment Rating during that time was 180 late, the current status was CO, and when they updated the current status to Paid in December, they did not update the Payment Rating during that period to reflect its additional CO status during that period.  That is actually to your benefit, as a CO is a more derogatory status.

Commercial credit reports throw all of these dates out in a jumble, without identification of what specifc status code it represents, or whether it is just an update or a new delinquency.  Many disputes over improper reporting are normally nothing more than matters of incomplete or crummy formatting of your CR, and arent usually the result of improper reporting on the part of the creditor.  Unfortunately, the lack of clear identification in the CR makes it extremely difficult, if not impossible, to pinpoint actual inaccuracies in reporting by the creditor themselves.

You may have a technical gripe, but I dont believe it would be to your benefit to dispute.  The important thing is that your CR reflect the currrent status of Paid, and the current debt balance of $0.  That is what creditors will look at. 

[FicoTron]

What great insight, thank you. I was just under the impression that paying an old CO wouldn't have a neg effect on my score. It did. Bringing it from 705 to 666. Which is prettyy huge. But is a 666 with a paid CO better than a 705 with an unpaid CO?

[Anonymous]

Doesnt that payment reage the account thus starting the reporting time all over. It had always been my impression that paying an old charge off, while morally good, and perhaps needed for a new mortgage or something had zero effect on credit score and run the risk of resetting the clock.

Just seems like everything i ever read siad the an unpaid charge off or collection vs. A paid charge off or collection has no bearing on score. They are both the same as far as score goes? Curious to know if i have had it wrong all these years

[MarineVietVet]

---

@Anonymous wrote:
Doesnt that payment reage the account thus starting the reporting time all over. It had always been my impression that paying an old charge off, while morally good, and perhaps needed for a new mortgage or something had zero effect on credit score and run the risk of resetting the clock.

Just seems like everything i ever read siad the an unpaid charge off or collection vs. A paid charge off or collection has no bearing on score. They are both the same as far as score goes? Curious to know if i have had it wrong all these years

---

While true that collections are scored the same whether paid or unpaid there is one way for a paid CO to help your score.

If a CO'ed credit card is reporting both the balance and the credit limit then that account is factored into your utilization. If you pay it off that will reduce your utilization and hopefully help your score. But this is the only way I know of that a paid CO will help. Remember though that the CO itself will still report even after doing this.

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[FicoTron]

But the clock doesn't restart. The report 7 years from dofd.

[FicoTron]

I just don't think it's being reported right. They considered it a CO in 2006 and wrote it off. It should not be reported as a new CO in 2011 right?

[FicoTron]

Spoke with a senior rep at HSBC, she didnt know her ass from her elbow, still trying to figure out what I should do moving forward.