Paying off old Charge Offs

[Anonymous]

So, here's my dilemma...

Background:

My wife has a couple of old CO's on her CR.  They equal about $2500 together and are listed as falling off her CR's on 6/2013 and 11/2014.  In the USAA CreditCheck monitoring site they show as "Potentially Negative - Closed", which I assume means they aren't an active collection, but just listed as CO's.

Question:

Should I pay these off or not?  I've read that by doing so it can drop her score, which I don't want to do since I'm going to be shopping for a mortgage in the next few months.  I'm a disabled vet and get a VA home loan with 0 down and a minimum of a 640 credit score.  I was told that both her score and my score need to be at a 640 average or above.  I live in California, where it's a community property state and her debts are considered mine, but I don't have any car payments and make over $100K a year by myself, which is a Fed govt job, so I don't think I should have a problem qualifying for a loan.  I would rather use the 2.5K for negotiating PFD's with other baddies or paying off the two CC's that we have to bring the utilization % below 7%.

Thoughts?  Anyone got a VA home loan with unpaid CO's on their or their spouses CR?  Just curious where I should focus my money at.

Thanks!

[madmann26]

The CO is affecting your utilization. When you lower your utilization, you'll see a bump in score.

[Anonymous]

If your CC utilization is >20 or 30% I would recommend paying these off, as it would increase your score, by how much depends on what else you have on your credit report. I've played around with my utilization ratio, having it really low, 15%, 10%, even 1% once, and my credit score didn't changed at all. But this is probably the quickest way to boost your score. I also have credit monitoring through USAA, and I have Score Watch? here on this website. I recently paid off a CO, I was afraid to do it, for the same reason, didn't want my score to drop, but after several failed attempts to get a PfD I just paid the thing off. Even though the credit scores that I get through USAA did not changed, my Equifax FICO score that I get here went up 17 points after that  So, who knows?.