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Will this HELP or HURT my FICO score??

TLC113
New Member

Will this HELP or HURT my FICO score??

Hello all!  I having been working very hard this past year to clean up my credit report and raise my FICO 5,4,and 2 scores so I can be in good standing to purchase a home by the end of this year. I have 1 derogatory account on my credit report from an unsecured loan through my credit union that was charged off in March 2017 for $1,338.00. I went through a divorce and was trying to get back on my feet and didn't have the extra $ at the time to make the payment. My question is, if I pay it off, even though it is closed and has been charged off for 4 years now, will it help my score, or will it hurt it since its been several years??

 

Thanks in advance, any advice is much appreciated!! 

 

FICO 8 - EQ 634 TU 652 EX 644

FICO 5 - 602  FICO 4 - 676 FICO 2 - 645

6 REPLIES 6
House2021
Frequent Contributor

Re: Will this HELP or HURT my FICO score??

When is the last time it updated? If it was recent then it won't hurt your score. I paid off a bunch of charge offs recently and their last update was between January-April of this year, it'll especially help your scores if it's causing you to have a high debt ratio. For example if you have $300O in open credit and you have that charge off then it's hurting it. 

Message 2 of 7
House2021
Frequent Contributor

Re: Will this HELP or HURT my FICO score??

Oh and all of mine were 5 year old charge offs

Message 3 of 7
babygirl1256
Valued Contributor

Re: Will this HELP or HURT my FICO score??

@TLC113 Welcome to the forum . . . Perhaps you can seek a PFD (Pay For Delete) or a goodwill letter explaining the circumstances that resulted in the adverse reporting. Is the derogatory account listed with all 3 CRAs? Wishing you success on purchasing your home.

Starting FICO 8 Score in 06/2019: EQ-625, TU-649, EX-640
Current FICO 8 Score in 06/2021: EQ-796, TU-806, EX-812
Goal FICO 8 Score in 06/2022: EQ-825, TU-850, EX-850
Message 4 of 7
TLC113
New Member

Re: Will this HELP or HURT my FICO score??

It last updated in June 2017 which was only 3 months after it was initially reported. I've heard of some circumstances where paying off a charge off ended up hurting more than it helped. TU and Ex are the only 2 it has been reported too. It has never showed up my EQ report. 

Message 5 of 7
Mr_Mojo_Risin
Valued Contributor

Re: Will this HELP or HURT my FICO score??


@TLC113 wrote:

It last updated in June 2017 which was only 3 months after it was initially reported. I've heard of some circumstances where paying off a charge off ended up hurting more than it helped. TU and Ex are the only 2 it has been reported too. It has never showed up my EQ report. 


It will cause a drop in score since it hasn't updated in almost 4 years.

When you pay it off, the account will be updated one final time. The aging process will begin for the paid off negative.

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Message 6 of 7
Birdman7
Super Contributor

Re: Will this HELP or HURT my FICO score??


@Mr_Mojo_Risin wrote:

@TLC113 wrote:

It last updated in June 2017 which was only 3 months after it was initially reported. I've heard of some circumstances where paying off a charge off ended up hurting more than it helped. TU and Ex are the only 2 it has been reported too. It has never showed up my EQ report. 


It will cause a drop in score since it hasn't updated in almost 4 years.

When you pay it off, the account will be updated one final time. The aging process will begin for the paid off negative.


Unfortunately, @Mr_Mojo_Risin is correct in my opinion, I believe it will hurt more than it will help in the short term. Plus for a bonus while they are updating, it may end up on your third bureau. Pesky updates. 

-Scoring wisdom: Credit Scoring Primer, Payment History, Amount of Debt, Length of History/New Credit, Mix/Disputes/Freezes/Searches, Mortgage Scores/Negative Reason Codes/V.9, Helpful Links,
CassieCard’s Reason Statements Thread,
iv's friendly statement to reason statement concordance,

ccquest’s Workbook to calculate metrics.
Clean/Thick/Mature/No New Revolver - 8,9; Clean/Thick/Mature/No New Account - 5/4/2.
Correct Ag.Util. under 5% all times. (Oldest/avg varies. Estimates above.)
Real world mortgage maxes are: EQ5-818, TU4-839, EX2-844.




(Everything said is JMHO and is not endorsed by FICO or MF. I have no affiliation with either, just a grateful member.)
Message 7 of 7
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