Equifax score dropped 18 points! What did I do wrong?

[dlm1113]

I am hoping you can help me so I don't make the same mistake again.  I was going through my credit reports for inaccuracies and noticed that an unpaid CO that I have with First Premier that stopped reporting in 2011 had a comment on my credit report that the "the account was closed by consumer" when in fact it was not. They closed the account.   I disputed it expecting them to removed that wording in the comments section.  Yesterday I received an alert from Score Watch that there was an update from First Premier. It looks like they removed the statement (see below) and it looks like they left the balance blank; but my score dropped 18 points!!  What did I do wrong so I don't have this happen again??  I feel so deflated!!!

There were other inconsistencies in the tradeline compared to the other credit reports and a few days later I sent a letter showing them the inconsistencies along with a copy of the credit report inserts showing them. Now I am scared that it will drop my score lower after they make changes again to my credit line.  Should I just have left them there even thought they were inconsistent?

Account opened: 8/2009

Description:Charge off account
Credit card
Amount in high credit is original charge-off amount

                                 Previously reported                                                   Newly Reported

Balance                    $426

Past Due                   $426                                                                            $426

Status                        Bad debt; placed for collection                                   Bad debt; placed for collection

Last Activity             11/01/2011                                                                  11/01/2011

Description               Account closed at consumer's request                      

                                   Charge off account                                                     charge off account

                                   credit card                                                                   credit card

                                   Amount in high credit is original                                  Amount in high credit is original

                                   charge off amount                                                       charge off amount.

[bdhu2001]

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@dlm1113 wrote:

I am hoping you can help me so I don't make the same mistake again.  I was going through my credit reports for inaccuracies and noticed that an unpaid CO that I have with First Premier that stopped reporting in 2011 had a comment on my credit report that the "the account was closed by consumer" when in fact it was not. They closed the account.   I disputed it expecting them to removed that wording in the comments section.  Yesterday I received an alert from Score Watch that there was an update from First Premier. It looks like they removed the statement (see below) and it looks like they left the balance blank; but my score dropped 18 points!!  What did I do wrong so I don't have this happen again??  I feel so deflated!!!

There were other inconsistencies in the tradeline compared to the other credit reports and a few days later I sent a letter showing them the inconsistencies along with a copy of the credit report inserts showing them. Now I am scared that it will drop my score lower after they make changes again to my credit line.  Should I just have left them there even thought they were inconsistent?

Account opened: 8/2009

Description:Charge off account
Credit card
Amount in high credit is original charge-off amount

                                 Previously reported                                                   Newly Reported

Balance                    $426

Past Due                   $426                                                                            $426

Status                        Bad debt; placed for collection                                   Bad debt; placed for collection

Last Activity             11/01/2011                                                                  11/01/2011

Description               Account closed at consumer's request                      

                                   Charge off account                                                     charge off account

                                   credit card                                                                   credit card

                                   Amount in high credit is original                                  Amount in high credit is original

                                   charge off amount                                                       charge off amount.

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I'm not an expert, but only waste your energy on disputing stuff that would be to your benefit.  A charge off is a major hit.  Closing a credit card is also a hit, but if it's closed by the creditor, it's worse than being closed by the consumer.  I suspect that it is also the case for collection accounts.  It says that the only reason your balance with the creditor was $426 is because they closed the account on you.  Otherwise, you would have stuck them with a higher balance.  

It's like a tenant who stops paying rent.  1) If you give them a 30 day or quit notice, they'll either pay up or end up owing you 2 months rent.  2) If you wait 4 months before you serve notice, they'll owe you 5 months rent. 3) If the tenant had left the second month, because they couldn't pay, it's different than the eviction even though it's still 2 months rent.  Your dispute makes you appear like scenario 2 instead of scenario 3.  Scenario 3 looks worse because it says even though you knew you couldn't/ wouldn't pay, you would have kept charging or using the service.

[dlm1113]

I think I understand what you are saying. So you think that is why it dropped because of the comments? Nothing else that I know of on my credit report changed. I also noticed that there is nothing in the new balance section. Would that effect the score in some way?

[bdhu2001]

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@dlm1113 wrote:

I think I understand what you are saying. So you think that is why it dropped because of the comments? Nothing else that I know of on my credit report changed. I also noticed that there is nothing in the new balance section. Would that effect the score in some way?

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Yes.  If everything else is the same, I believe it has affected your score.  I think it's more than a comment.  It's stating why an account was closed.  That's not a comment, it's a designation of the type of account.  For instance $700 high balance looks great, but when you add "60 day late," that's a designation, not a comment.  It changes how FICO views the account for their algorithm. Now you're part of "bad accounts closed by creditor and sent to collection" instead of "closed accounts sent to collection."  1)People close an account with Sprint or Tmobile and suddenly their sent a bill for $200. They're thinking "I was out of contract, I owe them nothing." so they don't pay and the bill gets sent to collection. 2)Other people don't pay their bill and Sprint or Tmobile close the account and then sends it to collection. There's a difference. In scenario 1 there person didn't think it was a legitimate bill and felt they were being cheated.  In scenario 2 the person knowingly elected to charge up a legitimate bill and refused to pay it.

Having said all that, check score buckets in this forum to see if you coincidentally changed to a new bucket which caused your score to drop. I think unlikely, but check.

[dlm1113]

Thank you!  So when I pay this off would it  make any difference in my score if I PIF or Settled? 

[bdhu2001]

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@dlm1113 wrote:

Thank you!  So when I pay this off would it  make any difference in my score if I PIF or Settled? 

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Try to get a PFD (pay for deletion) and get it in writing, before you pay.  That will have a much bigger impact. Check the forum and Internet for PFD process. Simply PIF will not have as much impact.

[dlm1113]

Thanks again but we are talking about First Premier and they have already said that they would not delete for payment.  I will continue trying for my other accounts.

Unfortunately I got another alert today from SW and my new Fingerhut account was added which also dropped my me another 6 points.  Not happy.  It is revolving however they do not show the credit limit, is it because it is new??

[Revelate]

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@dlm1113 wrote:

Thanks again but we are talking about First Premier and they have already said that they would not delete for payment.  I will continue trying for my other accounts.

Unfortunately I got another alert today from SW and my new Fingerhut account was added which also dropped my me another 6 points.  Not happy.  It is revolving however they do not show the credit limit, is it because it is new??

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Probably, similar thing happened on either my recent FIA or Barclay's cards when they did a ninja report of the tradeline.  Sorted itself out on the second report, and it has happened to other people.

Just a caveat on the discussion: whether the account comment is closed by credit grantor, or closed by consumer, doesn't matter to scoring.  Might to underwriting, but it's really not a big deal as any UW worth a darn is going to know why the account was closed anyway: usually it's painfully obvious looking at the tradeline.

[bdhu2001]

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@Revelate wrote:

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@dlm1113 wrote:

Thanks again but we are talking about First Premier and they have already said that they would not delete for payment.  I will continue trying for my other accounts.

Unfortunately I got another alert today from SW and my new Fingerhut account was added which also dropped my me another 6 points.  Not happy.  It is revolving however they do not show the credit limit, is it because it is new??

---

Probably, similar thing happened on either my recent FIA or Barclay's cards when they did a ninja report of the tradeline.  Sorted itself out on the second report, and it has happened to other people.

Just a caveat on the discussion: whether the account comment is closed by credit grantor, or closed by consumer, doesn't matter to scoring.  Might to underwriting, but it's really not a big deal as any UW worth a darn is going to know why the account was closed anyway: usually it's painfully obvious looking at the tradeline.

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Thanks Revelate.  I've only spoke with car and mortgage people and this was over 15 years ago when I had those discussions. Quite a few things have changed since then.  Especially how buying a home, earnest money, & how lender's view your credit report.

[dlm1113]

Thank you bdhu2001 and Relevate!  Your answers have helped me greatly.

Another question.  I am an AU on my husband's visa and he has 2-30 day lates within the past 12 month on his card.  Would this be hurting my score as an AU? How long before those 30 day lates stop affecting my score?

Should I ask him to remove me off as an AU?  I have 1 major cc with a $300 limit and a fingerhut card with a $200 limit.  If I take his account off, would I need to open a secured card? Thanks!