Will this HELP or HURT my FICO score??

Anonymous · ‎05-17-2021

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

House2021 · ‎05-17-2021

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.

House2021 · ‎05-17-2021

Oh and all of mine were 5 year old charge offs

babygirl1256 · ‎05-17-2021

@Anonymous 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

Anonymous · ‎05-17-2021

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.

Mr_Mojo_Risin · ‎05-18-2021

@Anonymous 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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Anonymous · ‎05-21-2021

@Mr_Mojo_Risin wrote:
@Anonymous 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.