Settlement Reporting vs Oldest Account

[Anonymous]

Greetings to all the Fico Gurus and Fellow Rebuilders!

I've been lurking on this board for the better part of 2 years now. I've never signed-in before to ask a question because there is so much information already available and my rebuild has gone really well thanks to all of you. 

My scores have gone from mid-500's in early 2017 to current FICO scores of:

Transunion: 691

Equifax: 698

Experian: 777

Like many, I made mistakes in my youth. I spent a year in the early aughts reviewing my reports, paying off my errors, and writing letters - so very many letters. I corrrected the bad stuff but stopped there - I neglected to build good credit. I didn't trust myself, to be honest, and still maintain I was right to hold off until I felt I could manage credit responsibly. I paid cash for everything for years. But thanks to you kind folks, I've gained a great deal of knowledge and confidence and, despite a thinner file, I am doing really well now.

So here's my current concern:

I have old student loans that appear on TU & EQ. I hadn't found this place yet and when a settlement was offered I thought it was the best course of action. I had just come off of a period of unemployment and they were the only thing I couldn't keep up with. They are the only derogetory item on my reports and are scheduled to fall off June 2019 - which will be great. But.... they are also the oldest accounts on those 2 reports by 12 years. I'm concerned that the AoOA reset will be worse for my scores than the older derogetory is now.

My current account ages:

CapOne: 2 years (oldest)

Comenity: 1 yr 10 mos

BOA: 1 yr 4 mos

BOA Travel rewards: 8 mos

So, any thoughts on how the students loans falling off and AoOA resetting will be reflected in my scores? I am aware that YMMV and nothing is set in stone, I'm just looking for an idea of what to expect from those that know more than I do.

Also, I should mention that my Experian report/score is an outlier. In addtion to not reporting the student loans, I am an AU on my Mom's card (have been for years for emergencies) that is 23 years old and only reports on EX. 

Thank you, again, to all of you. You really cannot know how much you have helped me understand how to not only manage my credit, but manage it well and with confidence. 

[NRB525]

Welcome, and glad to hear the info you read has been helpful.

How much are the student loans that were unpaid?

[Anonymous]

Hi NRB525!

Thank you! 

There was 11K left on the loans and I settled for 8K. It wasn't the best settlement. Would that I knew then what I know now. 

[NRB525]

For $3,000 I would let the FICO score do whatever it wanted. That is a lot of coin and it would be better spent ensuring one keeps up with current obligations.

The other concern is, you aren’t sure yet how, or how much, score will change when this drops off.

Even contacting the lender to discuss this probably triggers a refresh on your reports, extending the pain period.

Let the sleeping dragon sleep.

[RonM21]

Op congrats on your progress and I agree with NRB. I would just let it be. That 3K can definitely go towards more meaningful bills. Even if there was a difference, I don't know that it would be dramatic enough to warrant give up the $$$ for it.

[Anonymous]

I'm not really considering paying off the difference b/t the total and the settlement. That wouldn't make sense since it's due to fall off report so soon.

My concern is more that any gain in score from the last derog falling off those two reports will be considerably offset by the fact that this account is also my oldest by 12 years. It will reset my AoOA to 2 years  - and I don't know how much that will mitigate any score increase that the removal would give me.

[RobertEG]

Since the loans are paid, the current status will not be one of continued delinquency when the specific exclusion dates for the individual adverse items are reached, so the entire account will not be excluded by the CRA.

As clearly detailed on the EX web page, the CRA only removes the entire account when exclusion of derogs is reached if the account remains delinquent, and thus the current status of continued delinquency also is mandated to become excluded per FCRA 605(a)(5).

What will become excluded are the individual derogs, with monthly delinquencies in a common chain becoming excluded at 7 years from the date of initial delinquency in the chain (FCRA 605(a)(5)), and any reported charge-off or collection becoming excluded no later than 7 years plus 180 days from the DOFD that immediately preceded the CO or collection (FCRA 605(c)).

The entire loan will only be removed if the creditor decides to report its deletion at time of exclusion of derogs.

The loan should then remain for approx 10 years from the date the loan was paid (i.e., the account closed).

[Anonymous]

Thank you for responding, RobertEG. 

So if I understand correctly, the derogatory lates will drop off as of June 2019 (the 7-year mark), but the account itself will continue to report until the 10 yr mark from the settlement date in 2014 (unless creditor specifically reports to delete). 

If creditor doesn't delete, it will give me a few years to maintain the AoOA of that closed account while my other accounts age. Losing the only derogs AND maintaining my AoOA? That would be ideal! Whew!

Thanks to all who took the time to assist!