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Hello all! 

I am new to the forum, but I can already see that this a fantastic source of support and information. I look forward to learning from everyone’s input. 


To provide a little background, my scores were in the low 500’s and now they are EX669, EQ674, TU671 - still a long way to go, but I am proud of the growth. I need advice on your thoughts on how to proceed with a specific cc that was charged off. 


I planned to attempt a settlement with a credit card account back in 2017. The balance/credit limit was $2000. Unfortunately, I was unable to work out a settlement and the account was eventually charged off. Due to multiple obligations I did not attend to this debt as I should have. I haven’t really known how to handle the charge off, but to be honest since it was quiet I ignored it and focused on the ones that I was current on. With the exception of this account, the only late pays I have in the past 24 months are two mortgage pmts in Sept and Oct of 2019. I know not 100% up to date, but I use CK and it shows that I have 573 out of 575 on-time payments.


In the summer of 2020 after being declined for an auto loan, I spoke to someone at Lending Tree and they recommended a law firm that would “help clean up my credit”. I know now that this was a big mistake. I paid them a monthly fee to “work” on my credit reports on my behalf. The first thing they did was send dispute letters to every single creditor on my reports - including this charged off account that I haven’t heard anything from since February 2018. Up to this point in 2020, my credit reports have reflected a status date of February 2018 on this account Shortly after the letters went out, I started receiving letters from collection agency on this account. I really don’t know what transpired, but from sometime around that time, this charged off account is now showing a “status update” date as being updated monthly on TU and EQ (currently shows June 2021). EX still shows a “status updated” date of February 2018. I have also had a few phone calls from collection agencies since last summer. I may or may not have “acknowledged” the debt in these calls - I don’t recall.


I want to continue to improve my credit scores and if that means that I need to set-up payments on this debt, I certainly will. I just don’t know what the best option is for me. The card is currently showing Delinquent, Closed, Charged-off, balance updated June 2021 and reflects “account information disputed by consumer”.  What should I do with this account - payment in full is not an option for me right now.


I know this was probably too wordy and might not make complete sense, but please ask any questions that might clarify. I appreciate any input that you have for me - thanks in advance.

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I'm sorry to read that got sucked into paying a credit repair company to make your job harder. :(  


If this is your only charge-off, getting the TL removed completely will cause your FICO scores to shoot up noticeably.  Unfortunately, settling or paying it off will only get the TL updated (paid charge-off), and FICO will score the lates and the CO status as if you hadn't paid it.  


Note that a human reviewing your credit report in the future will likely be more encouraged about the paid status than FICO is.  :) 


The one upside from a FICO scoring perspective for paying the balance is that the TL will no longer appear to be maxed out (balance significantly more than the limit, which should be reporting as $0).  That will help your single-account utilization as well as your overall utilization.  In the latter case, how much it helps will depend on your total limits across all of your other open cards.


If you haven't already, get your paper reports directly from the bureaus.  I get emails all the time from Kredit Carmahahaha with information that is inaccurate, including references to my existing credit limits that don't even match the simulated credit reports they themselves provide to me.

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Hit Man-Thanks for the reply. This is my only CO. I do have reports directly from the three bureaus and you are correct I have definitely noticed that CK is not accurate/up to date. I do still use it as a quick check and there is something about the visual of that stupid graph they have that shows my credit score going up that encourages me and motivates me to pay things off (hey whatever works, right? Lol). 


So, I am looking into possibly doing a cash-out refi on my house. I only have about $40,000 in equity, and I don’t want to take that much. I just want enough to put new flooring in the house ($10,000) and pay off my current cc debt ($4700 not including the CO). My current home interest rate is 5.85% and have 22 years left on a 30-yr mortgage. I’m thinking with a lower interest rate I would it be able to refi/cash out what I need and reduce to a 15 yr mortgage and still keep my payment about what it currently is. 


Back to the CO - Is it in my best interest for the long term future to go ahead and include this CO amount in the refi/cash-out and try to pay it off? If so, who do I contact to pay it?...and would it still be appropriate to try to settle with whoever holds it, or are they going to expect the full $2600? 


Also, can you clarify for me the 7 yr drop off your report rule? Where does this CO fit in with that? When does the 7 yrs start? From CO? or did it start over when the credit assistance company contacted them? Will it be 7 yrs from the time I pay it to $0? Since it is reporting every month as delinquent will it just continue to stay on there - forever??


I know that is a lot of questions. Any information you can give me will be appreciated. Thanks in advance!


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7 years starts at DOFD, which is the most recent month the account went delinquent (30 days late) and was never brought current.  This applies to both the original creditor as wells as any TL reported by a CA/JDB.


On 6/6/2021 at 5:36 AM, Vetters said:

Back to the CO - Is it in my best interest for the long term future to go ahead and include this CO amount in the refi/cash-out and try to pay it off? If so, who do I contact to pay it?...and would it still be appropriate to try to settle with whoever holds it, or are they going to expect the full $2600? 


The main practical reasons to pay a CO are to have it deleted (rarely happens) and to avoid being sued (is this still within SOL in your state?). 


There isn't a practical way to generalize how much it will take to settle the account; it's definitely company-specific. 


On 6/6/2021 at 5:36 AM, Vetters said:

So, I am looking into possibly doing a cash-out refi on my house.


The underwriter may require you to settle this CO as a condition of receiving final mortgage approval.  


Worst case its the full balance, but you'll no longer have a 5.85% mortgage.


Of course, best case is they're willing to overlook it and you still no longer have a 5.85% mortgage.  :D


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