Credit score question

[PBear]

Walked away from a bunch of CCs/Loans in 2018. All charged off mid 2018. Since then I have paid for delete on all but one collection account which is being stubborn. FICO scores are around 650 now even with the one collection tradeline still there. 

Now I am debating disputing the 8 charged off tradelines on my reports. On one hand, any I get removed, makes less negative marks on my reports. But at the same time, they are heavily weighing my age of credit which is a positive. Below is a breakdown of accounts and their open dates. 

So what are your thoughts. If it was you, would you attempt to get the negative aging tradelines removed now and lower my average age or tradeline or just wait for them to fall off on their own? Do you think removing the aged charge-offs will help or hurt the credit score?

 

AVERAGE AGE: 7 yrs 1 mo

OLDEST ACCOUNT: 19 yrs 8 mos

 

Active Accounts Never Late
CC0 - 2022

CC1 - 2021
CC2 - 2021
CC3 - 2021
CC4 - 2014
CC5 - 2021
Student - 2018

 

Closed Never Late 
CC6 - 2015
Auto1 - 2007
Auto2 - 2015
Home1 - 2002
Loan1 - 2015

 

Closed - Charged Off - all around mid 2018
CC7 - 2016
CC8 - 2014
CC9 - 2008
CC10 - 2016
CC11 - 2016
CC12 - 2014
CC13 - 2015
Loan2 - 2016

 

Collection
1 collection outstanding for $3k

Edited August 5, 2022 by PBear

[hdporter]

First, a modest correction:  You've paid to "settle" your charge offs.  "Pay for delete" specifically refers to accounts for which you've successfully negotiated an agreement with the creditor for the to instruct the CRA's to delete the reporting account in exchange for full or partial payment of the amount due.  Obviously the difference is that "settled" accounts continue to report, but with a notation ("Settled at less than full value") that indicates the creditor has released any claim against the account.

 

The inclusion of one or two "settled" accounts poses pretty much the same impairment to your FICO scores as 8 "settled" accounts.  Since it's unlikely that you'll see more than a couple of such accounts removed as a consequence of a dispute filed with each CRA, I'd suggest the effort would be largely a waste of time and advise against it.

 

Looking forward, these accounts should be removed 7 years after "date of first delinquency".  From what you write, this should be late 2024/early 2025.  In the interim, you should let your existing accounts age and work to build up your credit lines.

 

This potentially leaves one black mark on your reports:  the collection.  If you can swing it, an "pay for delete" agreement with this creditor would be highly valuable.  You don't provide details of the Collection, but I presume that it may have 4 or 5 years to go before it ages off (7 years past "date of first delinquency on the original account"). 

 

Ultimately, you're going to take a hit on your credit age, especially once your 2002 mortgage ages off (10 years past closure).  Having "boarded" 5 new accounts in the last year or so, I suggest being fairly selective in what you apply for during the next year or two.  Where there's strong value (say, $800+), or strong utility, it still makes sense to app.  But short of that, I suggest restraint.

 

If you can finesse removal of the collection account, things are looking bright come 2025. 

 

Edited August 5, 2022 by hdporter

[PBear]

11 minutes ago, hdporter said:

First, a modest correction:  You've paid to "settle" your charge offs.  "Pay for delete" specifically refers to accounts for which you've successfully negotiated an agreement with the creditor for the to instruct the CRA's to delete the reporting account in exchange for full or partial payment of the amount due.  Obviously the difference is that "settled" accounts continue to report, but with a notation ("Settled at less than full value") that indicates the creditor has released any claim against the account.

 

Ah yes, I paid to delete the collection tradelines, not charge offs. 

Yeah I get what you are saying on 2 vs 8 settled accounts, all look bad. It's the only reason I haven't settled that one remaining collection account. If they won't pay for delete I'd rather have the $3k collection tradeline for 2.5 years than a settled collection for 7 years. 

[hdporter]

Just now, PBear said:

 

Ah yes, I paid to delete the collection tradelines, not charge offs. 

Yeah I get what you are saying on 2 vs 8 settled accounts, all look bad. It's the only reason I haven't settled that one remaining collection account. If they won't pay for delete I'd rather have the $3k collection tradeline for 2.5 years than a settled collection for 7 years. 

 

You beat me to the punch; I overlooked the remaining collection and was revising my remarks to address it.

 

I now grasp what you've written re the collections vs the charge offs.  If you've managed to PFD all but one collections, that's an outstanding achievement.

 

Just want to clarify one bit of confusion above:  paying on a collection does not extend the reporting limitation on the account.  Whether partially paid, settled, or paid in full, the collection should only report up to 7 years after the first delinquency on the original account.

 

However, from a FICO perspective, a settled collection scores only marginally better than an unpaid collection.  (Both have roughly the same impact in terms of adverse history; the outstanding balance against $0 available credit on an unpaid collection does take an added hit when it comes to utilization scoring ... building strong credit lines on your other accounts can partially mitigate that hit.)

 

You may find it useful to identify the collection agency; some here may be able to recommend successful PFD strategies that have worked with the CA (or confirm that they're not amenable under any circumstnace).

[PBear]

Very interesting HD. The CA is Absolute Resolutions. I've gone to the mat and even hired an attorney to negotiate offering paid in full and they won't budge on PFD. 

So if paying doesn't delete a CA tradeline and paying would only marginally help a FICO, sounds like the only reason I would pay the CA tradeline is if I was going to do something like getting a take a loan or mortgage where one of their stipulations is no outstanding collections, or similar. It only has 2.5 years before the charge off from OC is 7 years old. It's a collection of one of the CC Charged Off debts mentioned as CC OCs.

Thanks for the insight. 

Edited August 5, 2022 by PBear

[stickyfingers]

44 minutes ago, PBear said:

It only has 2.5 years before the charge off from OC is 7 years old.

 

Seems silly for the CA to not want to negotiate a PFD (though I understand many work this way) as, if you're 2.5 years from charge off, you're almost certainly 5+ years from DOFD or well beyond SOL in most states, in which case, absent you wanting to pay it, the debt is uncollectable.

 

I'm sure you/your attorney has pointed this out but the CA has already lost most all leverage and is just a couple years from losing *any* chance to recoup any monies. It's certainly in their interest to find some common ground...

[hdporter]

5 hours ago, PBear said:

So if paying doesn't delete a CA tradeline and paying would only marginally help a FICO, sounds like the only reason I would pay the CA tradeline is if I was going to do something like getting a take a loan or mortgage where one of their stipulations is no outstanding collections, or similar. It only has 2.5 years before the charge off from OC is 7 years old. It's a collection of one of the CC Charged Off debts mentioned as CC OCs.

 

@stickyfingers has pretty much said it all.

 

And, where it comes to paying the debt because it's required by a mortgage company, the recommended tact is to enter into a temporary agreement with the mortgage company that you will pay the debt at closing, and not pay it beforehand. 

 

The earlier FICO models essentially have a glitch where they regard a recent payoff of the collection no differently that they would score renewed collection activity; in other words, repayment usually sees a modest score dip.  Best to avoid that until you're at the table closing on the mortgage.