Charge off -Nordstrom

[Midlifecrisis]

Hey guys . 

Im trying to buy a house but i really damaged my credit in my early 20s . I have a Nordstrom charge off that is still owned by Nordstrom . When I look at my score on credit karma I can see it reported . I have been paying it off for the last year and will be done soon .   I was under the impression that if I paid it it would come off since they told me that it would show paid and I could reopen it in a year . Now I'm worried that if I pay it off in full it might effect me in a bad way . Could I still ask them to remove it if my report or is that only with credit collectors ? 

[Midlifecrisis]

Is it true that if the charge off has unknown or payments not reported  that can be used as a way to despute it . 

[jrwa81]

Charge-offs do not get removed.  If you pay it, the balance will simply be reported as zero and it will no longer be factored into your DTI, but the CO itself is not going anywhere.  It will fall off your reports 7 years from the DOFD.  Until then, it will remain on your reports reflecting a zero balance if it has been paid.  It's still a good idea to pay it since you do still owe the debt and you don't want it eating into your DTI when you apply for a mortgage.  Plus, paying it will also prevent them from going legal and suing you.

[FireMedic1]

Welcome @Midlifecrisis 

Probably not. It still came down to a string of late payments that led to the CO status.

[FireMedic1]

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@jrwa81 wrote:

Charge-offs do not get removed.  If you pay it, the balance will simply be reported as zero and it will no longer be factored into your DTI, but the CO itself is not going anywhere.  It will fall off your reports 7 years from the DOFD.  Until then, it will remain on your reports reflecting a zero balance if it has been paid.  It's still a good idea to pay it since you do still owe the debt and you don't want it eating into your DTI when you apply for a mortgage.  Plus, paying it will also prevent them from going legal and suing you.

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Its util %'s thats affected by CO's more than anything else. Unpaid is like a maxed out account. Lenders don't typically factor collections and charge-offs into your DTI ratio calculation unless you're actively making payments on those accounts.

[OmarGB9]

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@Midlifecrisis wrote:

Is it true that if the charge off has unknown or payments not reported  that can be used as a way to despute it . 

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No, that's not true. You can dispute to get errors fixed, but not to get the whole derogatory item off. That's not how it works. Paying it won't get it removed either I'm afraid.

Still, paying a CO helps as mentioned above with avoiding being sued and also it removes the debt owed from your utilization. Plus, if it's updating regularly, the updates will stop. So overall, it's still worth paying.