FICO Situation- Need guidance

[ABUCK]

I am just starting to rebuild my credit and after reviewing my accounts that are in collections I noticed that there weren't any collection accounts for my larger debts. My larger debts show up in my "accounts" section and are labeled "bad debt". Does this simply mean that they haven't been assigned to a CA yet?

[AndySoCal]

Depending on how it reported it could mean either the account is charge off or a collection account.

[ABUCK]

It says, "Charged off" on the account. What's the difference between that and a collection account?

[llecs]

Not all debts are reported by CAs. It could be that the OC still owns the debt (evidenced usually by a balance reporting vs. $0). Often an OC will continue to own the debt for a finite period of time all the while assigning it to various CAs in an attempt to collect. Often these CAs are bound by contract not to report. Examples usually include CapOne, Verizon, and so on. Then when they sell the debt, then the CA would usually report.

In your example, the OC still owns the debt and has assigned it to different CAs. Likely the CA will not report, but after a time, the OC may sell it if SOL expires, give up after so many tries, etc.

FYI, both an OC and a CA cannot report a balance on the same debt. If your OC sells the debt, then they would then report as a paid charge-off and will continue to report. The CA that purchased the debt then will have the option to report.

[AndySoCal]

I charge off account means the creditor has written the debt off on their books. Most of the time they will sell the debt to collection agency to try to collect it.  A collection account is an account that has been assigned to collection agency by the original creditor. In this case the collection agency would get a portion of what they are able to collect.  Or it is debt that collection agency has bought at reduced price in hopes of collecting the full debt.

Message Edited by AndySoCal on 10-01-2009 06:47 PM