Old charge off question

Anonymous · ‎09-05-2008

My wife and I are looking at buying a home FHA. Our lease will be
up in 10/09. This will give me a year to get my credit score up.
My score is now 540 up from 447 3 months ago. Very excited about
how things are getting closer to a workable score! I just recently
began to pay attention to my credit which I gave up on when I lost
my job in 03'

I have one remaining collection which is an old medical acct. That
shouldn't be too much of a problem to get rid of. $37 co pay from a few years back.

My biggest concern currently is what to do with 3 charge offs that
total about 5 grand. Last activity on all three is feb. 04' I know
they are past SOL where I live in California. When I run the score sim.
it says best action is to pay down the revolving debt. My only revolving debt is
2 cc's with $300 limits each. However the Charge off balances are being factored
in to my utilization.

If I pay/settle those charge off's will my score jump up because of small
amt of utilization. Or am I far enough away that the accounts aren't hurting
my score that badly.

My score is also been driven down by recent lates from my SL and a CC. I was still
in the "my credit is hopeless so it doesn't matter state of mind." It's too bad I didn't find Myfico 6 months ago, I would have never let the recent lates happen. Oh well that's my bad!

Thanks for any help!

-Ryan

Message Edited by hammer192 on 09-05-2008 12:45 PM

Anonymous · ‎09-05-2008

Yes...you score will increase if you pay...because the balances are still being factored into your UTL...and hurting your scores....some will say not to touch them...unless told to..but if your looking for a score increase....paying them will help....and getting the negative notations removed....PFD will not always help on COs because you will lbe losing history...which can in turn lower your scores...if they are past SOL...I would send DV letters....and if they validate....try to set up some agreement with them...to have the lates removed...if you pay...

DallasLoanGuy · ‎09-05-2008

if you didnt need the score increase, i would say to leave them alone until after mortgage.....

but if paying them helps the score, it might be a good idea.

the biggest problem may be that it takes a bunch of your cash reserves....

Retired Lender

Anonymous · ‎09-05-2008

Ok the Score Sim says:

best action = (670-710) based on paying down 90-100 perc. of revolving debt over a 24 month period.

My 3 accounts still showing balance with oc (not showing as a collection anywhere) are:

Merrick $1,292

Cap 1 $2,357

Cap 1 $1,756

"Ratio of your revolving balances to your credit limits 143%.

I have a recent cap 1 cc that's a yr old now. no lates on it.

Part of me wants to pick up the phone and make a settlement offer. The other partof me wants to leave it alone and maybe my score will be where it needs to be without any action. Is there anything else that I might want to consider to help sway me in one direction or the other?

Thanks sly and dallas for your help.

Message Edited by hammer192 on 09-05-2008 07:22 PM

DallasLoanGuy · ‎09-06-2008

Do you have any good accounts with high util? Maybe pay them down first to see what you get.

Over 620 = same rate as 850 on fha loans..... you don't have far to go

Retired Lender

Anonymous · ‎09-06-2008

I have 3 open revolving accounts:

gemb/mervyns - $200 limit / balance = 0

hsbc- $300 limit / balance = 230

cap 1 - $300 limit / balance = 200

I will pay these off and see if that helps my score. Maybe I should give my score time to climb before taking action on the co's? I have a year before I plan to apply for a home loan.

DallasLoanGuy · ‎09-06-2008

hammer192 wrote:
I have 3 open revolving accounts:
gemb/mervyns -   $200 limit / balance = 0
hsbc-                     $300 limit / balance = 230
cap 1 -                   $300 limit / balance = 200

I will pay these off and see if that helps my score. Maybe I should give my score time to climb before taking action on the co's? I have a year before I plan to apply for a home loan.

good plan

Retired Lender

Anonymous · ‎09-06-2008

Not hardly....the COs are reporting a balance...and it make it look like you are over you CL....paying your current one definitely will help...but the big boost will come from the COs...try to get your current ones down to 1-9% UTL....and you'll be good....but work on those COs...there is no difference score wise if they are PIF...or settled...so I would settle if I could...and save yourself the extra money...and hope these accounts were or are not sent to collections....then you would have to deal with the double whammy...of the OC...and the CA reporting....hurting you double...if the accounts were sold...the OC TL MUST show a $0 balance...they you should try to PFD the CAs....but try to work out something with the OC first....GOOD LUCK!!!

Anonymous · ‎09-06-2008

None of these charge offs are showing up as collections on any reports. Could it be possible that they have been sold to collections but the CA's are not reporting? If they were never sold to a CA then I'm good (pay/settle). If they were sold then I might make things worse by checking to find out?

Anonymous · ‎09-06-2008

Anyways it goes...you might want to call the OC and see if they were sold to collections...how old are they???...if they are pretty old....most likely they will be...OCs don't hold on to old COs for long...they write them off..and send them to CAs...