Credit Score Points and Charge Offs?

Question

I have been working very hard to repair my credit after losing my job nearly forced me to declare bankruptcy 3 years ago. had quite a view late payments but I've paid most of my balances down to less than 50% if not zero. However I currently have 2 charge off on my credit report(s). One is a car loan and the other is a personal loan. The total charged off amount was about 23,000. In the last two years I have paid about 19,000 on both loans. One is paid and the other has a principal balance of about 4,000. I am working with the creditor to have them changed from charged off to paid/paying as agreed as part of a final settlement. Does anyone have any idea how many actual points on your credit report charge offs are "worth"? Meaning if my credit score is currently 600, and I get these accounts changed from Charged off Paid, to Paid/Paying as Agreed with no charge off listed, how many points should I expect my score to go up for each considering the type of accounts they are?

Isn't it at the discretion of the creditor how the debt is reported? They decide what they report to the credit bureaus. They can agree as part of the settlement to NOT report and once I have documenation of that it will be removed completely. I am negotiating for them to report PAID as agreed with a Zero balance rather than what they are currently reporting which is - CHARGED OFF AS BAD DEBT. Would them not reporting at all and the debt disappearing be better than it saying PAID as agreed?

The final settlement will allow me to dictate whatever I want changed on my credit report for BOTH accounts. Is getting both deleted entirely BETTER than having them changed from Charged Off to Paid/Paying as Agreed? And back to my original question - How many POINTS can I expect to gain on my credit report for having both deleted or changed to positive status?

Answer 1

As a previous poster mentioned - no one knows how the credit bureaus calculate the FICO scores. Additionally, these scores are calculated DIFFERENTLY depending on what type of credit you might be seeking. For example, the FICO score will be different if you are applying for a mortgage versus a credit card and even different again for a car loan.

Now that we have that out of the way I'll address some of your other questions:

Creditors can report an account how they choose to a point. For example, they can't report an account paid as agreed if it hasn't been. The credit world has to follow a set of rules or it does them (and us) no good at all. So your Charge Offs will still show as a Charge Off, but will also show PAID.

To be honest I do not know where people are coming up with this idea that bad debt can be DELETED off of a credit report. I believe those that promise this to you are mistaken or trying to deceive you. In all my years in the finance and credit industry I have NEVER seen anyone be able to remove derogatory information from a credit report before the normal time frame expired. For most derogatory credit the time period that it will remain on your credit is 7 years from the last ACTIVE date.

Be warned that your creditors may say they will report the debt as deleted, but I suspect that they would not be able to follow through with that statement. I could be wrong, but I don't think so.

Sorry that I'm not able to answer your question as fully as you would like. Best of luck to you!

Answer 2

Yes your credit score will decrease, but not because you settled, it is because when you paid the account you made "new" activity against an old debt, bringing the account to current status. The older a debt is the less impact it has on your credit report. Also you should know that: (Never trust what a debt collector tells you) 1) Charge-offs are huge negative marks on your credit report and they will stay on your credit report for 7 1/2 years...even if you later settle for less or even pay the debt back in full. Once a debt has been charged-off there is absolutely nothing that can remove it before the end of the reporting period. 2) Paying old collection will not remove them from your credit report...full payment or settled payment UNLESS the debt collector agrees to remove the account from your credit report in exchange for payment. The agreement is called a "pay for deletion". 3) If a third party debt collector has your account, and it is a credit card account that was charged-off by the original creditor, even if the debt collector gives or agrees to a pay for deletion agreement, it will only remove the collection account, the original charge-off by the original lender will still be reported. Nothing removes a charge-off.

Answer 3

Points are calculated at a rate that no one but the credit bureau can tell you... One thing that I can tell you that I have learned is that you are allowed to make a consumer statement on your own report (it will appear at the very end of your report) that can explain your situation and can greatly affect an approval/disapproval for future credit.
Example: I was temporarily unemployed due to ........ but am now working full time. i HAVE MADE EVERY EFFORT TO WORK WITH MY CREDITORS TO MAKE SURE THAT MY DEBTS ARE PAID...) ETC. Most people do not know that you are allowed to broadcast on your reports the reasons for your dis -functional credit. Take advantage of this and keep plugging away at your debt. On time payments-back payments- will increase your score dramatically.

Answer 4

Sister, girl!

For the balance that has $4,000 left, you should ask for a pay-for-deletion if you want a big bang (increase in FICO) score. Actually, you should've asked for both when you are paying amounts like $19,000!

You want as many items REMOVED completely from your credit report and given the big dollars you are putting down to PAY THEM IN FULL, these creditors might be willing to oblige and accommodate you.

Try it out. The worse they can say is no. But remember, the pay for deletion must be obtained in writing.

Answer 5

I think you should contact each credit bureau. And check with the creditor. I don't think it's possible to change from paid charge off to paid as agreed, because it really wasn't.