Paying C/O effect on mortgage scores

[Anonymous]

Will paying a <$100 C/O that is over 4 years old but reporting monthly help a mortgage score? They will not do a PFD. I believe FICO8 will ignore a <$100 paid C/O but it won't help mortgage scores. Is that correct? 

Out of curiosity, will paying it help any other scores (Auto, bankcard, etc)? 

[ShanetheMortgageMan]

Question might be better asked in the Understanding FICO® Scoring section, as the mortgage section primarily discusses questions about qualifying for a mortgage, not how doing various items to credit would impact your mortgage score.  

However, from what I've seen, a charge-off that continually reports late payments damages mortgage scores.

[Thomas_Thumb]

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@Anonymous wrote:

Will paying a <$100 C/O that is over 4 years old but reporting monthly help a mortgage score? They will not do a PFD. I believe FICO8 will ignore a <$100 paid C/O but it won't help mortgage scores. Is that correct? 

Out of curiosity, will paying it help any other scores (Auto, bankcard, etc)? 

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Paying the charge off will have no impact on the older Fico 04 and Fico 98 scores used for mortgages. Nonetheless, paying it off stops current month reporting as delinquent and payoff looks better on a manual review.

[ShanetheMortgageMan]

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@Thomas_Thumb wrote:

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@Anonymous wrote:

Will paying a <$100 C/O that is over 4 years old but reporting monthly help a mortgage score? They will not do a PFD. I believe FICO8 will ignore a <$100 paid C/O but it won't help mortgage scores. Is that correct? 

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Paying the charge off will have no impact on the older Fico 04 and Fico 98 scores used for mortgages. Nonetheless, paying it off looks better on a mnual review and may benefit Fico 9 score.

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Good to know.

Is that because it's <$100? 

Mortgages are currently using 5/4/2 versions.  Along with TU 2, does that also apply to Equifax 5 & Experian 2?

EXPERIAN, FICO v2

TRANS UNION, FICO Classic 04

EQUIFAX, BEACON 5.0 FICO

[Thomas_Thumb]

For those interested in proper identification of Fico models they are:

1) Fico 98 (EX Classic version used for assessing mortgage credit worthiness)

2) Fico 04 (EQ and TU Classic versions used for assessing mortgage credit worthiness)

3) Fico 8 

4) Fico 9

For each of the above models there are three primary versions:

1) Classic

2) Auto enhanced

3) Bankcard enhanced

Some Fico models have other versions in limited use or o longer used such as:

1) Mortgage Fico 8 - this one never gained traction

2) Bankruptcy version - available with various Fico models

A decoder for the misleading "score designators" is:

a) EX score 2 is EX Fico 98

b) EX score 3 = EX Fico 04

c) TU score 4 = TU Fico 04

d) EQ score 5 = EQ Fico 04

Starting with Fico 8 nomenclature was changed so the score designator matched the Fico version although EQ still mentioned a "Beacon 9" which is actually the Fico 8 model.

The older Fico models don't look at dollar amount or paid/unpaid status. For these models it's black and white: You have a C/O on file or you don't. Impact may still lessen somewhat over time but, not much.

Regardless of dollar amount its a worthwile strategy to attempt a pay for delete with the C/O like what some have done with collections. Not sure how well PFD will work on C/O but, worth a try.

[Revelate]

Well, I don't know that's quite right with how CO's work.

CO's are on tradelines and count as such: closed tradeline, non-zero balance, certainly on the revolving side all the usual metrics apply so pay it.

CO's also, in a word, SUCK, because proper reporting of them is updating the CO entry every single month... which means it's always new from a payment history perspective.  If you can't get it deleted, and it's reporting last active (last update) as current:  pay it, right now.  Get that line drawn in the sand and that derogatory entry aging.

If it's been idle, vis a vis DOLA from 2014 or whatever, I'd probably let it ride much like the common strategy is with open collections and see if you can pay it as a function of closing.  CO's are weird animals scoring wise, seriously consumer unfriendly.