Clean credit for 12 months...

[Anonymous]

What exactly accounts for clean credit for 12 months? All of my open accounts have been reporting me in good standing for the last year with no lates. I do have negative accounts that have been charged off. Do they make me have a unclean reporting? Even if some of them have a zero balance? Thanks....

[DallasLoanGuy]

no lates or other derogatories fo 12 months.

old chargeoffs or collections are just that.... old!

you can have 10 charged off accounts(unpaid) and still qualify if the last 12 months is good.

[jbh]

If I may ask, is that calculated based on DOLD or when a collector magically adds an update/start date (such as 1/08) ?

Thanks

[RobertEG]

Jerseygurl, congrats on being clean for a year!

But I an quite puzzled at any "clean for 12-months" rule for FICO scoring.

Maybe a creditor may use this as a lending decision, but I dont see it as a FICO scoring criteria.

But lets look at it solely  from a FICO perspective.  Old late payments remain for 7 years from the date of the last delinquency in the most recent chain of account delinquencies, and being over 12 months only reduces slightly the affect of the delinquency in scorng, but does not erase prior derogs. If a major derog, it does not become a clean account  Accounts are normally not charged off or put into collectection until they reach 120-180 days late from the last due date.  So they are major FICO scoring derogs.  COs and CAs remain for 7 1/2 years from the DOLD.

Becoming "clean" in your CR requires that a late CC payment ages more than 7 years from the delinquency date, or for CO or CA accounts, more than 7 1/2 years from the date of the first delinquncy in the most recent chain of consecutive delinquencies that led to the CO or CA. 

Neither the OC or CA may "reset" this date based upon when then put the account into collection, wheter the account was subsequently closed, or when you made any partial or full payments on the debt.

Howvever, IMHO, I see nothing in the law, regs, or CRA procedures that puts any special exclusion on "12-months clean."  It only means that the derogs will decrease in scoring empahsis, but they will still hurt a bunch.

But, digressing from only FICO considerations, Dallas raises a great point.  Creditors may view your history in any way they wish, and if they apply a 12 month clean rule, then GREAT!

Message Edited by RobertEG on 08-05-2008 12:47 AM

[RobertEG]

Dalllas, thanks for your input from the lendor perspective.

I just have a followup question for you, in you decision making.  If a consumer has old COs or CAs that are unpaid,  is  that not a red flag for repayment risk analysis?

Would you require their full payment before granting a mortgage loan?

Or does a simple prior 12 month prior immediate payment history, with no lates, satisfy your decison?

Thanks for your input.

Message Edited by RobertEG on 08-05-2008 12:55 AM