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Charge offs not in collections - confused

awayknd
Established Member

Charge offs not in collections - confused

Needs some direction...


I have 2 charge offs:

- Macy's

- Merrick Bank

Both have been charged off which shows on my credit report. However, there's no collections for these accounts on my CR. 

When I call the OC they say accounts have been charged off there's nothing they can do. How do I get these paid and removed or just removed?


I have one account in collections which I will PFD, if I can get the charge offs taken care of I'm sure my score will show a significant increase.


Please advise.

 

 

Message 1 of 14
13 REPLIES 13
RobertEG
Legendary Contributor

Re: Charge offs not in collections - confused

You can offer a pay for deletion to the creditor, but apparently that has been attempted, and they declined.

That is their right, and in fact, the common CRA credit reporting manual instructs that accurate delinquency reporting should not be deleted based on payment of the debt.  They are thus acting in full compliance with their credit reporting obligations.

 

An unpaid delinquent debt, including one reported as CO, increases in total period of delinquency as time proceeds and status updates are reported, and paying terminates that increase.  Thus, while paying wont provide immediate score increase, it will prevent further negative impact from increased period of reported delinquency.

 

Additionally, a delinquent debt can, at any time, either be assiged for collection or sold to a debt collector, resulting in addition of a collection.  Payment before that occurs may prevent addition of a collection.

Message 2 of 14
850Dreamer
Frequent Contributor

Re: Charge offs not in collections - confused

Collection is a very specific designation. One can even have true collection accounts that aren't coded as collections on credit report. It'll just say "collection" in comments. 

A charge off is not a collection. An account does not ever have to be a collection. It can simply run through the 30-60-90-180-Charge Off status and be done with. Collections can be both internal and external. An account can be in collections without being sold to a third party debt collector (what most people think of in terms of collections). 

 

So TL;DR : Collections don't have to report as collections.


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Message 3 of 14
OmarGB9
Community Leader
Super Contributor

Re: Charge offs not in collections - confused

You probably can't get them removed. When an original creditor keeps the account themselves, it's unlikely they'll delete the TL, even if paid in full. The best you can do is pay in full or settle and then try to ask for GW removal after the fact, but again it's unlikely and they're under no obligation to do so.


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Message 4 of 14
awayknd
Established Member

Re: Charge offs not in collections - confused

Got it, but one more question. 
Since charge off wasn't sold to a third party (yet), should I try to negotiate a settlement with the creditor or do they usually expect the full payment?


And even if it won't be removed it will stop the reporting and show a zero balance, correct?

Message 5 of 14
mycreditscoreisfair
Frequent Contributor

Re: Charge offs not in collections - confused


@awayknd wrote:

Got it, but one more question. 
Since charge off wasn't sold to a third party (yet), should I try to negotiate a settlement with the creditor or do they usually expect the full payment?


And even if it won't be removed it will stop the reporting and show a zero balance, correct?


My experience with charge offs (Chase and Navy Federal) is that they'll try to collect and settle before they outsource collection. Both of mine took about 18 months before I was contacted by a collection agency that I settled through.

 

If you pay/settle with the original creditor your balance will go to $0.00 when it's paid and it will be noted as 'paid in full' or 'paid, settled for less...' or something along those lines depending on how you decide to pay/settle.

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Message 6 of 14
OmarGB9
Community Leader
Super Contributor

Re: Charge offs not in collections - confused


@awayknd wrote:

Got it, but one more question. 
Since charge off wasn't sold to a third party (yet), should I try to negotiate a settlement with the creditor or do they usually expect the full payment?


And even if it won't be removed it will stop the reporting and show a zero balance, correct?


You can try, yes. They may or may not be willing to settle for less. It depends on the age of the debt, and who the creditor is.

 

And yes, that is correct. Paying, whether in full or settling for less, will require them to update the balance to zero and stop monthly updates, allowing your scores to recover.


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Message 7 of 14
awayknd
Established Member

Re: Charge offs not in collections - confused

Thank you for the reply. 

 

I see where you are planning for a mortgage this year and how you've raised your credit score.  My goal for mortgage is September.  Since you're into the loan process, what score do you think I should try to achieve?  Did you put in an loan app with your 620 score or are you waiting for 670?  Also, which score do you look at, the middle score. My mortgage score on MyFico is 534, but I have a 644 with Experian, 585 TransUnion and 565 Equifax.  There's such a difference and it seems like Equifax takes longer than the others.  I raised my scores about 13 points in 2 mos.  I hope to get an update soon as most of the credit cards are paid off and I'm starting on my 3 collections/charge offs this week.  I plan to have everything paid to zero by May.  

 

Any insight you can give is helpful and congrats on your journey.  

Message 8 of 14
mycreditscoreisfair
Frequent Contributor

Re: Charge offs not in collections - confused


@awayknd wrote:

Thank you for the reply. 

 

I see where you are planning for a mortgage this year and how you've raised your credit score.  My goal for mortgage is September.  Since you're into the loan process, what score do you think I should try to achieve?  Did you put in an loan app with your 620 score or are you waiting for 670?  Also, which score do you look at, the middle score. My mortgage score on MyFico is 534, but I have a 644 with Experian, 585 TransUnion and 565 Equifax.  There's such a difference and it seems like Equifax takes longer than the others.  I raised my scores about 13 points in 2 mos.  I hope to get an update soon as most of the credit cards are paid off and I'm starting on my 3 collections/charge offs this week.  I plan to have everything paid to zero by May.  

 

Any insight you can give is helpful and congrats on your journey.  


I'm hoping to be in the 700s by the time I apply for a mortgage. Worst case, I'm hoping my FICO 8 scores are over 680. I still have one collection and five unpaid charge offs on my credit reports so I'm not sure where my score will get to. Realistically, I'll have one charge-off remaining at the end of the year.

 

I just look at the FICO 8 scores. I've bought homes previously and lenders never seemed to concerned about the other scores. Of course, I could be wrong because I never had any credit issues prior to mid-2019.

 

As far as what score you need, it depends on what kind of loan you're looking to obtain. FHA loans are easier to obtain and require a lower down payment. But I'm hoping a higher credit score will open more doors and let us get a better deal until we can refinance. My credit won't be completely clean until 2025.

Starting score (January 2020): 454
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Current score: 650
Current goal: 670

Credit cards:
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Discover: December 2020 ($7,300 - AU)
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Ultimate goal: Mortgage by February 2022

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Message 9 of 14
designated_knitter
Established Contributor

Re: Charge offs not in collections - confused


@awayknd wrote:

Got it, but one more question. 
Since charge off wasn't sold to a third party (yet), should I try to negotiate a settlement with the creditor or do they usually expect the full payment?


And even if it won't be removed it will stop the reporting and show a zero balance, correct?


I had a CO with Merrick that I wanted to settle directly with them.  They still owned the debt but had a 3rd party CA collecting on their behalf.


Merrick refused to talk to me and insisted I work through the CA.  I wound up settling for 1/2, declaring victory and moving on before the CA hit my reports.

 

Good luck!

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Message 10 of 14
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