is it true that one charge-off is just as bad as 8?

[Anonymous]

If I have 8 charge-offs and I am trying to start settling, is it true my credit score will not increase as I settle an account until they are all settled?

What is the motivation to pay down debt if no improvement in credit score occurs?

Thanks!

[SunriseEarth]

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@Anonymous wrote:

If I have 8 charge-offs and I am trying to start settling, is it true my credit score will not increase as I settle an account until they are all settled?

What is the motivation to pay down debt if no improvement in credit score occurs?

Thanks!

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Score models are a bit complex and rely on a number of factors.   How much your score would improve for each CO depends on each CO and the affect it currently has.   I had two COs.   Settling on one boosted my scores ~20 points, even while the other still reported.   When the other unpaid CO aged off, my score went up another 20 points or so.   

If you're starting to settle on COs and want to see the biggest score increases, settle on the COs that are hurting you the most.   One that's currently reporting a balance every month that is at 300% UTIL would affect you more than one that was sold 4 years ago and no longer updates.  

[Cheshiregrl]

Your motivation depends on what your personal goals are. I'm no expert but logic tells me that it does matter. It also matters how old they are. It matters if you get a couple deleted it will more than likely not affect your credit score until you remove all collections. Just paying a collection will hurt you in the eyes of fico because the collection will update on your report so it looks new. If you read through the topics here you can get a better idea of why and how.

[kjel]

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@Anonymous wrote:

If I have 8 charge-offs and I am trying to start settling, is it true my credit score will not increase as I settle an account until they are all settled?

What is the motivation to pay down debt if no improvement in credit score occurs?

Thanks!

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Depends.

Are they your debts, are the amounts being reported as owed accurate? How recent are the charge offs? Is it within the SOL for your state? Do you want to pay them in full or settle for a partial payment? At this point don't worry about score impact, worry about removing negative items from your reports.

If you don't think the charge offs are yours or disagree with the balance, send a debt validation letter. If you feel they are yours and you agree with the amount I would offer a Pay for Delete-meaning you pay the full amount owed in exchange for the item to be removed from your reports. Score impact will vary depending on how old the debt is, how it's affecting your utilization, and whatever else is on your reports.

[DaveSignal]

All of those charge offs are negatively affecting your credit utilization, which is a large scoring factor.  Paying them will improve utilization and will also stop any creditors that are regularly updating, giving you a way to age the baddies.  Also, many members have had success goodwilling paid charge offs.  Lastly, it is easier to get accounts with the same lenders later if you don't owe money.  I was able to get my CSP with an older Chase CO still on my reports... it was paid, however.

[CreditDunce]

Until you take care of the CO's, someone could always sue you.  If it is past the SOL, it would be easy to get the suit dismissed, but you would have to show up to court.  If not past the SOL's they could get judgement and/or have your wages garnished.

It is unlikely to happen for small debts, but it is always possible if they think you have the money.   BK may be able to erase the debts, but it will hurt your score worse and is only works if you truly don't have the money.

[AndySoCal]

A settled account is also considered derogatory.  Settling accounts  does not necssarily raise your credit score.  The example cited  where did help was due to the change in the credit utilization.   Question about the 8 are referring to an 8 in the payment history.  An eight in the payment history indicates a foreclosure or repossesion.  in the case of the foreclosure is yes it is just as bad. A charged of real estate loan will be read as a foreclosure by many underwriting engines. Why would the lender charge off the loand and  take property that is securing the loan. The repossesion is much the same stroy but the cost repossesing the vehicle and who much its worth are factors in the decsion.

[takeshi74]

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@Anonymous wrote:

 is it true that one charge-off is just as bad as 8?

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No.  It is true, however, that even 1 derog can have a significant impact.

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@Anonymous wrote:

What is the motivation to pay down debt if no improvement in credit score occurs?

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Improvements do happen but, as stated above, all derogs are not equal and you may see less of a change with one derog versus another depending on age and other factors such as how you settle your debts..  Generally speaking derogs will hold you back.  The motivation is to get them all off your reports so you're not restrained by them.  Aim for PFD's where you can get them.

Building and rebuilding credit takes time and effort.  Don't be easily dragged down by the fact that it will take time.