Will paying past due balance on closed secured card change how it is report?

[GaryB_5165]

My son has a derogatory item on his file for a Bank of America credit card.  The credit report info is pasted below.  The account is currently being reported as Charge-Off each month.  My understanding is that BofA does not due PFD's. So, if my son pays the $190 owed, will the status change to Paid and will that likely have a benefit to his credit scores?  And also, will the payment re-age the account?  It's been almost 2 years since the account first went past due.  

Thanks

Account Info

Account status Closed

Date opened Feb 10, 2017

Account type Secured Credit Card - Revolving Terms

Balance on Sep 08, 2020 $190

Credit Limit $1,200

Payment Info

Status Charge-off

Status date Nov 2018

Past due amount $190

Late payments

Oct 2018

Sep 2018

[Brian_Earl_Spilner]

Depends if it's updating. If it's being reported, each time will count as a fresh derogatory. Paying it off stops this and he'll stop taking scoring hits. If it hasn't been reporting, paying it off will result in an initial score hit for a fresh derogatory even though it's being updated to paid and $0. No more score hits.

An additional benefit is possibly getting back in with BofA or mending the relationship if he's still with them.

[GaryB_5165]

Thanks for your reply.  Yes each month for almost two years it has been reported as Charge Off.  

So if i understand you correctly, the payment will basically stop the monthly negative statuses from being reported.  Will that improve his score immediately, or will it improve over time since there will no longer be current negative activity?

[RSX]

looks like it is reporting each month

definitely get him to pay it off and have it report $0 balance from now on

his scoring will begin to go up once that is done

[Brian_Earl_Spilner]

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@GaryB_5165 wrote:

Thanks for your reply.  Yes each month for almost two years it has been reported as Charge Off.  

So if i understand you correctly, the payment will basically stop the monthly negative statuses from being reported.  Will that improve his score immediately, or will it improve over time since there will no longer be current negative activity?

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Hard to say. I'm on a dirty scorecard so I don't receive a score hit when my chargeoff updates. When I paid off all of my collections and they were all removed, I got a near 50 point score boost. Don't know if there would be a score boost if it's his only one, or if it remaining on his report as paid will still hinder him.

Also, it can't be re-aged. Making a payment would only renew the Statute of Limitations. Since he would being paying it off, it's a non-issue.

[GaryB_5165]

Thanks @Brian_Earl_Spilner and @RSX .  I'll update this post after the payment is made and let you know what happens.  

[Anonymous]

Someone correct me if I'm wrong, but paying a CO doesn't make it go away, meaning it will still be present on the CR for ~7 years and thus adversely impacting score.  I've always understood the benefit as being that it is seen [upon manual review] as being paid and that it then ages rather than being counted as a fresh negative monthly.  That being said, if it remains for 7 years it will continue to hold back scores significantly until it falls off.