Pay off of charged off account drops some score?

[Anonymous]

I was playing with identity guard.  If my ex-husband finally refinaces or settles his charged off student loan to remove my name (as court ordered), Equifax shows a 66 point drop in my score.

Why would they punish a person for paying off a bad debt?

TransUnion shows a 41 point increase, while Experian shows no change with this scenario.  I am so confused.

[AndySoCal]

If your name is removed from the student loan then the loan should stop reprting on your credit report. If were going to simulate this I would do so by deleting the account from the credit report not showing it as paid. On the Ex husband credit report depending on what score model is being using it could hurt the score. The FICO score is one of those score models.   The score model will do this when old derogatory account is brought forward in time IE paying it off or having the account updated causing to re-report..

[Anonymous]

I don't think they will remove it from my report, because in their eyes, I was a co-signer, therefore legally liable.

So it will affect me the same way it would affect him correct?  Is there something else I should do or request?

Also, on many reports its shows that the account will drop off in Oct 2012.  I thought that student loans never drop off if they are in charge off.

Also, my ex currently pays a monthly payment to the account.  So, the history of the account is not old.  Every month is marked as charged off.

I am preparing to take him to court to sue for personal damages as he was ordered to refinance the account five years ago.

Help is greatly appreciated!

[llecs]

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@Anonymous wrote:

I was playing with identity guard.  If my ex-husband finally refinaces or settles his charged off student loan to remove my name (as court ordered), Equifax shows a 66 point drop in my score.

Why would they punish a person for paying off a bad debt?

TransUnion shows a 41 point increase, while Experian shows no change with this scenario.  I am so confused.

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To add, I saw your other post that you were using Identity Guard. That service offers scores, but they are not FICO scores and lenders wouldn't use them. Also ignore any of the advice offered that comes with the score and the score simulators too. FICO scoring behaves much differently.

IMO, under FICO scoring, your score would remain the same once paid. It doesn't matter if you owe $0 or $10,000 on charged-off debt, the impact per your score is the same. FICO scores based on the worst delinquency, and that is the CO itself. I don't know enough about divorce and credit (you may want to check out the board within these forums with the same name), but I don't think your name can be removed if you are a joint account holder. If a joint account holder, the only option to relieve the debt is if he PIF the debt or refinanced it into an account with his name only, but that wouldn't remove the account from your credit reports. Now once showing as paid, you could send a letter to the creditor kindly asking them to delete and maybe make a mention of the circumstance. Per FICO scoring, you have the opportunity to see an increase if the account was one of your newest and if you have a bunch of recent or severe lates reporting.

Is it possible to lose points when PIF a CO? Rarely, but as mentioned, it can happen.

[Anonymous]

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@Anonymous wrote:

I was playing with identity guard......TransUnion shows a 41 point increase, while Experian shows no change with this scenario.  I am so confused.

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Hi mal,

Yep to llecs' post.

FAKO's and FICO's are different. They are built on different algorithms which create different scores - in addition, the scores change in diverse directions and for diverse reasons. A FAKO increase/decrease does NOT yield a FICO increase/decrease

I've pulled tons of fako scores (I go through phases where I like to have credit monitoring services of various sorts). It doesn't matter who the source is. I've learned to ignore the FAKO scores and the advice that accompanies them. I don't read them anymore. I did for a long time, trying to discern any possible connection, but the reality is, once again, they are built on different algorithms, they create different scores and they adjust those scores based on differing criteria.

FICO's the score that counts - no lender is going to pull your identity guard scores.

"The truth is, only Fair Isaac knows how FICO scores are calculated, and their formula is kept very secret. Other credit scores can sometimes come close to the mark, but they can be off by as much as 100 points either way. This is important because lenders don't use FAKO scores; they almost always use FICO. So it does you no good to know a score that a) isn't correct, b) won't be considered by lenders."
 

Hope that's helpful!

[Anonymous]

He is planning to settle the account.  I don't have any other delinquent accounts.  I guess I don't have a choice but to push for him to get it off my credit anyway, despite a possible drop.

If something happens to him I don't want to be responsible for paying the account.