Question about Credit Score Simulator for Charge Offs

[Anonymous]

Hello,

I am using the credit score simulator on myfico to see if paying off all of my charged off debt of $8305 from 2015 will actually result in a score increase as the simulator shows.  My current scores are now 630 EQ 627 TU 613 EX.  The simulator shows if I pay off all of my revolving debt which is the $8305 my scores will go up to 686 EQ 669 TU 694 EX.  Is this simulation realistic?  I am asking because I do not have on hand the $8305 and would consider taking out a personal loan to pay off these balances and making monthly payments.  Any advice would be appreciated.

[RobertEG]

Several issues are involved in score updates upon paying of a delinquent debt.

Is the debt revolving or installment?

Paying delinquenct debt can lower your % util if revolving,, which could have significant score impact.

When did the creditor last update the continued delinquency status?

[Anonymous]

The debt is revolving credit card debt that has been charged off (spread out over 6 credit cards totaling $8305).

Equifax shows my utilization as 92%.

Transunion shows utilization as 92%.

Experian shows utilization as 93%.

I currently have 3 open credit card accounts.  One with 0 balance of 700$ CL, 1 with a balance of $125 of $600 CL, and the other with 0 balance of $1400 credit limit.

The creditor of 5 of the cards last reported 11/2017 and 12/2017.  The other card last reported recently was 3/2018.

[Miner]

You will see a jump. I don't know about if it will be a high as the simulator shows as it never works for me when I try to simulate the increase when my COs fall off in 8 months. And the increase won't all be immediate as it will ramp up over the next several months as you gain age from the last negative CO update. At least that was the case when I paid my last CO last September which had been updating monthly. Then there is the question of what your new overall utilization will be. If that improves, the score jump will be higher.

Taking out a loan to pay it will negatively have an impact due to a new account till it ages some and its utilization drops some from the opening balance. If you don't have an installment loan and the new loan is qualifies as one, you'll see a bigger jump than the negatives when it reports since you'll have a better credit mix.