How long to update after paying collections/charge off?

[Anonymous]

Hi everyone, hope you all are having a great day 🙂

I am trying to repair/rebuild my credit report. I had some major medical issues/job loss and for the past three years have seen my credit go from great to terrible.

Anyways, I am now able to start trying to fix some things.

How long does it take for a company to report a paid collection? I had a medical bill, I called and settled for an amount, and paid it. I was told that the account would be settled and removed from my reports completely. How long does this usually take/is there a requirement for how long they can take to update?

Second...I had a credit card that went into collections, was charged off, closed.
I settled with the third party collection agency. They said they will let the original lender know the account is settled.
Since I settled with collections, will my original lender update the account saying that debt has been settled?
Since it was a charge off/closed, will paying it through a collections agency help my credit score in any way? Either way, I wanted to pay it to show that I am trying to be responsible and not leaving open amounts of debt. I mean I know I didn’t pay the full amount, but I hope paying the collections settlement amount will be reflected on my report in some way, like the original lender putting a note or something that says “paid” or balance updated to 0 since I did pay the settlement as agreed. If so, any idea of how long it would usually take for the original lender to update the paid off amount?

Thank you for reading, I appreciate your time 🙂
Any other helpful tips or info would be greatly appreciated as well.

I am trying my best to fix my credit after years of not being able to, and I am very receptive to any and all help/advice/info

[OmarGB9]

So a few things here.

1. Expect it to take 30-60 days for your reports to update, though it's usually closer to 30 days. As far as a requirement, I believe the law doesn't specify an amount of time, it just says "timely manner."
2. I'm assuming the original lender still owned the account and just hired a CA to collect on their behalf. In any case if you've settled, yes, one or the other will report that it's settled with a balance reflecting as $0. If you settle, they'll typically make a note on the account saying "Paid - Settled for less" or something to that effect. But the comment makes no difference as far as scoring. Only upon a manual human review of your report would someone notice and question it. As far as paid vs unpaid collections, paid is always better, even if it was settled. Unpaid collections typically keep updating as an open balance and suppress your scores, whereas paid will zero out the balance and the derog will age.

[satio]

Expect the Charge Off to take at least 2 reporting periods.

If the unpaid balance was 1,000 and you settled for 500 (50%) expect that the first time it updates on your reports it will show a payment made of $500 and a remaining balance of $500 still past due.

Then the following month it will finally update to 0 balance.

It typically will take two reporting periods for it to fully update and be marked as PAID if you settled for less.

[Anonymous]

Thank you so much! This was exactly the info I was looking for 😁

I’m new to trying to rebuild my credit...so people like you who take the time to help are awesome and greatly appreciated. Have a great day!

[Anonymous]

Thank you! I greatly appreciate you taking the time to answer. Since I’m just starting out trying to rebuild my credit, finding real answers from real people have been making this process much easier to understand.
Have a great day! 😁

[RobertEG]

Updating is governed by FCRA 623(a)(2), which requires that once information has been reported, any changes in the reported information must be "promptly" made to the CRA as necessary to maintain the current accuracy of the information.

The statutory update period is left intentionally subjective, as different information can require longer or shorted periods to clear necessary processing and be admin handled and then reported to the CRAs.

What is or is not "prompt" is a subjective determination that varies depending upon the type of information and the circumstances.

A generally accepted interpretation of what is considered "prompt" is the next regular reporting period/date after the changed item of information has become aware to the furnisher, and is then forwarded to their reporting department or personnel.

That is typically at 30-60 days after the info has changed......

[Anonymous]

Hi again,
I just got a notification that something on my credit report had changed- and it was the settlement amount being subtracted from the balance owed of the charged off account. I am SO glad I remembered your post, because I couldn’t understand why there was still a balance. Then I remembered your post.

So I was just wondering if you know why they do it this way? I’m just curious, why don’t they just report it at $0 once settled- is there a reason that it’s processed like this? Thanks!