Closed versus Open Charge-off or Collection Accounts

[Anonymous]

Which is the correct way of reporting and how does it affect credit score?

The Facts: I have a bunch (5 or 6 depending on the Bureau) of old Collection accounts. All are past Statute of Limitations in my State. Some are owned by a Junk Debt Buyer and some are not. One is reporting as "Closed" and the rest are reporting as "Open". Which is correct?

I can make arguments both ways: Since I cannot be successfully sued for any of them, I could argue that under law they are closed. But, I still technically owe the money, so I could make the argument they are still Open. Obviously none are available for use any more, so once again I could argue they are all closed.

Does the Credit Score make a difference between the Open and Closed Collection accounts? If so, what is the difference between the two as far as credit scoring is concerned? Last month my biggest balance re-reported the TL as open, as they have been doing monthly for years and last month I took a 60 point hit. The balance on that one is $95K, the rest are much lower. Does that make a difference? They all age off my credit file this year.

[gdale6]

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@Anonymous wrote:

Which is the correct way of reporting and how does it affect credit score?

The Facts: I have a bunch (5 or 6 depending on the Bureau) of old Collection accounts. All are past Statute of Limitations in my State. Some are owned by a Junk Debt Buyer and some are not. One is reporting as "Closed" and the rest are reporting as "Open". Which is correct?

I can make arguments both ways: Since I cannot be successfully sued for any of them, I could argue that under law they are closed. But, I still technically owe the money, so I could make the argument they are still Open. Obviously none are available for use any more, so once again I could argue they are all closed.

Does the Credit Score make a difference between the Open and Closed Collection accounts? If so, what is the difference between the two as far as credit scoring is concerned? Last month my biggest balance re-reported the TL as open, as they have been doing monthly for years and last month I took a 60 point hit. The balance on that one is $95K, the rest are much lower. Does that make a difference? They all age off my credit file this year.

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No difference for Fico scoring its the fact it happened that matters and since  they are updating monthly it looks new to Fico every month and it keeps your score depressed.

[RobertEG]

An Open collection is one in which the debt collector still has active collection authority and the debt is unpaid.

A Closed collection is one in which either the debt has been paid or the debt collector no longer has active collection authority, either by way of termination of an assignment from the current owner, or if the debt collector was the owner of the debt, they have sold it.

While a collection remains Open, the debt collector can make monthly reporting which informs others that the debt remains unpaid, and thus under Open collection.

FICO views that similar to increased monthly delinquency of, for example, 60 to 90 days, and thus it accordingly affects scoring.

Once the collection is Closed, FICO no longer considers updated reporting as an extended delinquency, and thus the collection begins to age in scoring effect.

Expiration of a state SOL only affects ability to obtain a judgment, and does not discharge the debt or terminate the ability of the debt collector to continue to collect.

Thus, expiration of SOL does not close a collection.