Charge off advice

Anonymous · ‎08-11-2020

PFD or just pay?

I only have one account left on my credit report that needs repair.

It was a charge off from an old checking account that I left with a negative balance.

I had run up a lot of overdraft fees and needed a fresh start. The VP of the bank was super understanding and tried to help me as I was going through a rough patch. But I was not able to pay off the debt within 30 days so he created a line of credit and charged off the remaining balance of $412. Over the past year, my focus has been on paying down debt and making on time payments on my mortgage and two credit cards. I’ve brought my util down but not below 30% yet.

I am now in a better position where I can pay off that balance. Will it hurt my score if I get a PFD on this charged off account? Is it better just to pay what is owed and explain it to underwriting when I apply for a car loan?

My scores have gone from very bad to fair-to-good and are close to moving into a solid good rating. I am writing GW letter to Capital One to remove lates and if that is successful, my score should definitely get into that good zone.

Current scores from myFico

EX 652 EQ 661 TU 657 AAoA: 6.8 years , oldest acct 17.3 years

So I don't want to undo all my hard work by inadvertently causing the bank to validate the negative tradeline if I'm going to pay if off anyway and already took the hit on my credit report/score.

Any advice? Thanks!

chiefone4u · ‎08-11-2020

@Anonymous wrote:
PFD or just pay?

I only have one account left on my credit report that needs repair.
It was a charge off from an old checking account that I left with a negative balance.
I had run up a lot of overdraft fees and needed a fresh start. The VP of the bank was super understanding and tried to help me as I was going through a rough patch. But I was not able to pay off the debt within 30 days so he created a line of credit and charged off the remaining balance of $412. Over the past year, my focus has been on paying down debt and making on time payments on my mortgage and two credit cards. I’ve brought my util down but not below 30% yet.
I am now in a better position where I can pay off that balance. Will it hurt my score if I get a PFD on this charged off account? Is it better just to pay what is owed and explain it to underwriting when I apply for a car loan?
My scores have gone from very bad to fair-to-good and are close to moving into a solid good rating. I am writing GW letter to Capital One to remove lates and if that is successful, my score should definitely get into that good zone.
Current scores from myFico
EX 652 EQ 661 TU 657 AAoA: 6.8 years , oldest acct 17.3 years
So I don't want to undo all my hard work by inadvertently causing the bank to validate the negative tradeline if I'm going to pay if off anyway and already took the hit on my credit report/score.
Any advice? Thanks!

In almost all instances having a negative item deleted will produce the best score improvements.

When you pay this account off it will report again to show a $zero balance. Depending on when it last updated, you could potentially lose points (temporarily) for paying off the account.

If you can negotiate PfD with the bank you potentially could see a score increase, depending on how often it reports.

If it is your oldest account and hasn't updated in say 6 years, there is the potential for a (minor) drop in score because of the changes in account age (age of oldest account, and average age of accounts).

To me, having satisfied the debt and no longer having any guilt about it or fear of collection attempts makes it worth clearing the debt any way I could. Points will rebound.

If I had to guess, you could see a 25 point increase having it deleted to about 5 point loss by having it deleted.

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Starting Score: EQ:608, EX:617, TU:625
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Anonymous · ‎08-11-2020

@Anonymous wrote:
PFD or just pay?

I only have one account left on my credit report that needs repair.
It was a charge off from an old checking account that I left with a negative balance.
I had run up a lot of overdraft fees and needed a fresh start. The VP of the bank was super understanding and tried to help me as I was going through a rough patch. But I was not able to pay off the debt within 30 days so he created a line of credit and charged off the remaining balance of $412. Over the past year, my focus has been on paying down debt and making on time payments on my mortgage and two credit cards. I’ve brought my util down but not below 30% yet.
I am now in a better position where I can pay off that balance. Will it hurt my score if I get a PFD on this charged off account? Is it better just to pay what is owed and explain it to underwriting when I apply for a car loan?
My scores have gone from very bad to fair-to-good and are close to moving into a solid good rating. I am writing GW letter to Capital One to remove lates and if that is successful, my score should definitely get into that good zone.
Current scores from myFico
EX 652 EQ 661 TU 657 AAoA: 6.8 years , oldest acct 17.3 years
So I don't want to undo all my hard work by inadvertently causing the bank to validate the negative tradeline if I'm going to pay if off anyway and already took the hit on my credit report/score.
Any advice? Thanks!

You will hopefully get others to chime in here, but it is unlikely - under normal circumstances - that you can get a PFD with a charge off. Original creditors rarely do this, and they are usually - PFDs - associated with accounts in collection.

If, however, you get the charge off removed permanently, you should see a score boost. If no PFD, you should still pay full balance, because it looks better than having an unpaid charge off. A manual review of your CR with an unpaid charge off will not be a good thing. (I recently traded in my car for a newer model and had to explain a few paid charge offs; if they were not paid, I would not have received the financing)

I believe if you get the charge off paid and your util down below 30% you should see some points come back.

Good luck and keep us updated!