Filed a dispute and score went down!?

[Anonymous]

Hello everyone,

I yesterday purchased score watch from this fine site (in preperation to get the best reward card I can) and pulled my EQ report. I saw my first credit card (and biggest blunder) that was opened in 2002 and closed in 2007 was incorrectly being reported as simply a charge off. While the card was closed by the bank I did end up paying them back, that is I paid the collection company back. This is easily noted on my CR because there is no outstanding collection. So naturally I filed a dispute, only to find today that my score has slipped from a 686 to a 680 because of the dispute. The last 5 years after my mistakes I have had a clean record paying off 2 car loans maintaining one currently and having a CC for a year with 0-2% util. Any thoughts or experiences?

[laz98]

did it show your balance as zero, reflecting that you did pay it off?

also, paying it off won't make the chargeoff status go away.  if it did in fact get charged off, even if you pay it back, the account will still show as charged off.

your score may have dropped because accounts that are being disputed are (sometimes?) taken out of scoring calculations, so maybe once your dispute is cleared, your score will bounce back.

[Anonymous]

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@laz98 wrote:

did it show your balance as zero, reflecting that you did pay it off?

also, paying it off won't make the chargeoff status go away.  if it did in fact get charged off, even if you pay it back, the account will still show as charged off.

your score may have dropped because accounts that are being disputed are (sometimes?) taken out of scoring calculations, so maybe once your dispute is cleared, your score will bounce back.

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It shows I have a balance of 1179 and past due amount of 759. I paid this off in full 5 years ago to the collection agency. As I said, I have no open collections on my CR so they took it off. My issue is not the label of a charge off, but it should be a paid charge off. I figured if it were corrected it should help my score a bit.

[laz98]

okay, so they are reporting the balance incorrectly.  gotcha.  hopefully they will update it correctly for you.  if not, i hope you kept your payment records!

[Anonymous]

Thanks laz, I am not so much concerned about winning the dispute, I feel like that is in the bag... just confused as to why my score would go down. It is the oldest item on the books, but it is also the worst. I have paid in full auto loans not much younger, so I don't think it is an issue of average age... just wanted to see if anyone had some concrete info on this to clarify things for me and others.

[laz98]

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@Anonymous wrote:

Thanks laz, I am not so much concerned about winning the dispute, I feel like that is in the bag... just confused as to why my score would go down. It is the oldest item on the books, but it is also the worst. I have paid in full auto loans not much younger, so I don't think it is an issue of average age... just wanted to see if anyone had some concrete info on this to clarify things for me and others.

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that's probably exactly why your score went down.  when this account got taken out of score calculations, it dropped the average age of your accounts, which dropped your score.

(i realize you are looking for a concrete, 100% answer, but this is my best guess.  hopefully others can help you more.)

[Anonymous]

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@laz98 wrote:

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@Anonymous wrote:

Thanks laz, I am not so much concerned about winning the dispute, I feel like that is in the bag... just confused as to why my score would go down. It is the oldest item on the books, but it is also the worst. I have paid in full auto loans not much younger, so I don't think it is an issue of average age... just wanted to see if anyone had some concrete info on this to clarify things for me and others.

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that's probably exactly why your score went down.  when this account got taken out of score calculations, it dropped the average age of your accounts, which dropped your score.

(i realize you are looking for a concrete, 100% answer, but this is my best guess.  hopefully others can help you more.)

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Laz, you are probably right. Fantastic idea on my part, this dispute will probably take 45 days. I was planning on applying for the Citi Thank you Premier next month, now it seems like I should wait a bit longer before I start racking up rewards.

[laz98]

when you get it, let me know how well you like it!  i'm thinking of getting one next year too

[pizzadude]

Yep, since this is your oldest account, it lowered your AAoA when it was taken out of FICO scoring. 

Assuming that the TL doesn't get deleted it will get factored back in once the dispute is resolved.

[Lel]

When accounts are disputed, certain aspects are excluded from scoring, but not all of them.  Financial/payment data are excluded - for example, balances and payment history.  However, non-financial aspects, such as date of account opening (and its effects on average age of accounts) are still included in scoring.

ETA: sorry, I should have included my theory about why your score went down.  If that was your only account with derogatory comments, then you've probably been temporarily rebucketed into the no-derogs scoring group.