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Will paying my last charge off help?

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Anonymous
Not applicable

Will paying my last charge off help?

Background:

TU:~640s

EQ: ~620s
EX:~620s

I got hurt really bad in the army. It took me roughly 6 months to recover once I got out, 3 to get back on my feet after finishing recovering. Got slammed with a lot of late payments, and a few charge offs.

A bit ways down the road from there I got hit with medical bills that I didnt know about.

I paid all of my COs off except for one. Its a 2600 balance from USAA for a vehicle that was totaled a long time ago.

Right now that CO was established in 2010, and was last updated in 2013.

Ive been told by some people to pay it, and some not to bother, as it wont help my credit score if I do.

What should I do? I have the cash to pay it off right now, but I dont want to make the wrong decision.

I want to pay it off, because that is the right thing to do, but I dont want my credit to take another hit at the same time.

Message 1 of 9
8 REPLIES 8
rmduhon
Valued Contributor

Re: Will paying my last charge off help?

If it's updating monthly then paying it will stop the updating (after it updates to paid with a zero balance of course) which will stop the continual damage to your scores. If it's not updating monthly then you can wait until it's excluded then pay it which won't hurt your scores. Do you know the DoFD on the account and the SOL for your state?
Message 2 of 9
Anonymous
Not applicable

Re: Will paying my last charge off help?


@Anonymous wrote:

I paid all of my COs off except for one. Its a 2600 balance from USAA for a vehicle that was totaled a long time ago.
Right now that CO was established in 2010, and was last updated in 2013.
Ive been told by some people to pay it, and some not to bother, as it wont help my credit score if I do.
What should I do? I have the cash to pay it off right now, but I dont want to make the wrong decision.
I want to pay it off, because that is the right thing to do, but I dont want my credit to take another hit at the same time.


Your credit certainly won't take a hit for paying it.  It just might not improve any.  You say it was CO in 2010, so should it be scheduled for deletion next year?

 

If you are outside your state's lawsuit SOL and want to "do the right thing" maybe offer a pay-for-delete.  They get their money, you get rid of the collection on your report.  You can even offer less money for the delete if you can negotiate it.  If you're within SOL you don't have as much leverage.

 

If you don't end up paying it, expect to hear about it the rest of your life.  Just had a zombie debt collector start harrassing me a few weeks ago over a CC debt from 2001.  They can't legally enforce you to pay it, but the debt is still valid and they can sell the collection around to keep harrassing you, and I don't think there's any limit on that.

Message 3 of 9
Anonymous
Not applicable

Re: Will paying my last charge off help?

SOL for Maryland is 3 years.

DoFD is May of 2013, so Ive got a lot of time.

The real kicker is they arent reporting my full pay schedule. Right now its missing over 2 years of good payments. Its really frustrating.

Message 4 of 9
Anonymous
Not applicable

Re: Will paying my last charge off help?

Id be more than happy to pay more than what I owe if they would agree to remove it. I make more than enough money, its not the issue. The issue is my credit, and its smothering me at the rate of 23.99-34.99% for cars, 70-80% for short term loans, and 60% for trade lines.

I could have bought a lamborghini from my last car payment. Its completely outrageous!

Message 5 of 9
Anonymous
Not applicable

Re: Will paying my last charge off help?

I found these items that many may find useful, and I do believe it answers my questions unless the CRAs are lying.

http://blog.equifax.com/credit/does-paying-a-collection-restart-the-debt-clock/

https://www.experian.com/blogs/ask-experian/paying-off-account-will-not-restart-the-seven-year-time-...

I really hope people will find these to be useful.

Message 6 of 9
Anonymous
Not applicable

Re: Will paying my last charge off help?

+1 on offering a PFD. Company gets their money, you get the baddie removed. Win-win. If they won't do PFD, I would just pay it anyway. A paid collection definitely looks better than an unpaid, and like the articles say it will not change the DoFD. Good  luck!

Message 7 of 9
RobertEG
Legendary Contributor

Re: Will paying my last charge off help?

Two future events could still occur.

First, the creditor could still refer for collection or sell the charged-off debt, resulting in the addition of a collection to your credit report.

Second, if you apply for a mortgage, the underwriting procedure could possibly require payment of the delinquent debt.

 

The liklihood of either depends upon your situation, and may or may not apply......

 

Message 8 of 9
Revelate
Moderator Emeritus

Re: Will paying my last charge off help?


@Anonymous wrote:

I found these items that many may find useful, and I do believe it answers my questions unless the CRAs are lying.

http://blog.equifax.com/credit/does-paying-a-collection-restart-the-debt-clock/

https://www.experian.com/blogs/ask-experian/paying-off-account-will-not-restart-the-seven-year-time-frame/

I really hope people will find these to be useful.


They're not lying, it's just not the complete story.

 

Paying on a collection doesn't restart the clock, what it does do is updates the last activity field, which for some reason is calculated against (and it's a stupid and broken one but there's been a lot of incidents over the years with older algorithms on this), and that's why there's a bunch of common wisdom to let sleeping dogs lie... if it's not updating, don't touch it.

 

This is pretty much universally true with CO's as that's an entry on the base tradeline: I wouldn't touch it sans PFD personally when talking FICO scoring in a vacuum.

 

RobertEG is perforce correct, but a collection would have the same DOFD as the original tradeline anyway plus at most six extra months of life in terms of exclusion, so YMMV.




        
Message 9 of 9
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