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Effects of paying off a chargeoff in full on the Fico 2,4 and 5 scoring models

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jmedina6149
New Visitor

Effects of paying off a chargeoff in full on the Fico 2,4 and 5 scoring models

I am trying to qualify for a mortgage loan and buy my first house.

 

I recently got my last remaining collection removed from my credit report and my  Fico 2,4 and 5 scores which are used by my mortgage lender went up by 35 points just by having this collection removed.

 

The month after that score increase I only paid my 5 credit cards with 6% utilization and the 4th monthly payment of my 12 month long credit builder loan that are all in good standing with 100% on time payment history and none of my Fico 2,4 and 5 scores went up at all, not even 1 point, these scoring models only raised points for me so far when charge off or collections get removed.

 

Even though I have no collections on my credit report anymore, I still have a total of 7 aged chargeoffs on my credit report that include chase bank, bank of america, capital one, citi, and comenity capital bank that are set to drop off in 2025 and 2026

 

My credit counseling service is advising to negotiate with capital one and citi in order to try to get a pay for delete settlement or at least paid in full.

 

If I cannot get a pay for delete settlement with capital one and citi, will paying their chargeoffs to a 0 balance raise my Fico 2,4 and 5 scores?

 

My current Fico scores for this scoring model is Experian - 561,  Transuinon - 568, and Equifax - 644 and my mortgage lender says I need to have at least a 580 on the middle score to qualify for an fha loan, is there anything else I can do to raise this in order to get approved for a mortgage loan?

Message 1 of 4
3 REPLIES 3
FireMedic1
Community Leader
Mega Contributor

Re: Effects of paying off a chargeoff in full on the Fico 2,4 and 5 scoring models


@jmedina6149 wrote:

I am trying to qualify for a mortgage loan and buy my first house.

 

I recently got my last remaining collection removed from my credit report and my  Fico 2,4 and 5 scores which are used by my mortgage lender went up by 35 points just by having this collection removed.

 

The month after this I just paid my 5 credit cards and 1 credit builder loan that are all in good standing on time with autopay and none of my 

Fico 2,4 and 5 scores went up at all, not even 1 point, these scoring models only raised points for me so far when charge off or collections get removed.

 

Even though I have no collections on my credit report anymore, I still have a total of 7 aged chargeoffs on my credit report that include chase bank, bank of america, capital one, citi, and comenity capital bank that are set to drop off in 2025 and 2026

 

My credit counseling service is advising to negotiate with capital one and citi in order to try to get a pay for delete settlement or at least paid in full.

 

If I cannot get a pay for delete settlement with capital one and citi, will paying their chargeoffs in full raise my Fico 2,4 and 5 scores?

 

My current Fico scores for this scoring model is Experian - 561,  Transuinon - 568, and Equifax - 644 and my mortgage lender says I need to have at least a 580 on the middle score to qualify for an fha loan, is there anything else I can do to raise this in order to get approved for a mortgage loan?


Welcome @jmedina6149 

Did you mean "paid off"? Getting all those CO's to $0 balance may help some. It will drop your aggregate util %. Getting Cap1 and Citi to PFD a CO wont happen. Hopefully you have other loans? If that was your only loan and its paid off. Thats hurts. You dont need CCS. You can do it all on your own by posting here and save your $$$$$$.


Message 2 of 4
TheKid2
Frequent Contributor

Re: Effects of paying off a chargeoff in full on the Fico 2,4 and 5 scoring models

Everyone has unique experiences, but I will tell you from my experience that PFD of CAs and paying off COs had a significant difference on my scores. Using Fico 5,4,2 for your question I went from a 581 middle score to 679 with everything I learned on these forums.

 

- I paid all CAs off and got them deleted.

- I paid down all my revolvers.

- I negotiated and paid off all my COs, so they reported a $0 balance. Even if they say "Settled for less", the key is reporting the $0 balance and not having a new CO reported every month.

 

The COs showing a balance are hammering your scores even when you pay down your open accounts. For easy terms, it's like you have maxxed out cards from a utilization perspective. You have to settle / pay off the COs.

 

So, I would say you can get to a 580 middle score if you get the CAs removed and COs paid off.

 

BTW, I tried AZEO, but the scores peaked when I was at AZE2. Here's more details if it helps:

 

https://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Rebuild-Story-From-COs-amp-CAs-to-AZEO/td-p/...

 

JOINED 4/2020


FICO 8 = 582, 620, 589 / Mortgage = 633, 526, 581


CURRENT PEAK *Thanks to the MF Community!


FICO 8 = 715, 711, 720 / Mortgage = 688, 696, 681

Message 3 of 4
SouthJamaica
Mega Contributor

Re: Effects of paying off a chargeoff in full on the Fico 2,4 and 5 scoring models


@jmedina6149 wrote:

I am trying to qualify for a mortgage loan and buy my first house.

 

I recently got my last remaining collection removed from my credit report and my  Fico 2,4 and 5 scores which are used by my mortgage lender went up by 35 points just by having this collection removed.

 

The month after that score increase I only paid my 5 credit cards with 6% utilization and the 4th monthly payment of my 12 month long credit builder loan that are all in good standing with 100% on time payment history and none of my Fico 2,4 and 5 scores went up at all, not even 1 point, these scoring models only raised points for me so far when charge off or collections get removed.

 

Even though I have no collections on my credit report anymore, I still have a total of 7 aged chargeoffs on my credit report that include chase bank, bank of america, capital one, citi, and comenity capital bank that are set to drop off in 2025 and 2026

 

My credit counseling service is advising to negotiate with capital one and citi in order to try to get a pay for delete settlement or at least paid in full.

 

If I cannot get a pay for delete settlement with capital one and citi, will paying their chargeoffs to a 0 balance raise my Fico 2,4 and 5 scores?

 

My current Fico scores for this scoring model is Experian - 561,  Transuinon - 568, and Equifax - 644 and my mortgage lender says I need to have at least a 580 on the middle score to qualify for an fha loan, is there anything else I can do to raise this in order to get approved for a mortgage loan?


1.  I do not know if paying the charge offs will get you an increase in your mortgage scores in the short run, but it will help in the long run.

 

2.  You should make sure that one of your revolving accounts reports a balance, preferably a small balance, each month.

 

3.  Where are you getting the mortgage scores from?  Are you sure they're being updated?  The only way I know of to get them is to pull your 3 bureau report from MyFICO.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 4 of 4
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