- July 26, 2011 at 4:05 am #43686
I have had it on my score for a bout a year now , and I want to pay it off IN FULL … How many points will my score raise by doing so? The credit card people say 35-50 points , but that sound unreal or is it??July 26, 2011 at 4:34 am #189279
the credit card people are always going to inflate the benifit to you in order to get you to do what they want.
If it is a charge off then you will be lucky if you get half that unless you have very little credit.
I would personally never pay something off just for a bump on my credit score unless I was working a mortgage and needed a XXX score to qualify for a better rate. Consider the big picture and not your score.July 26, 2011 at 5:29 am #189280
There are really too many variables to give an accurate answer but I think 35-50 points may be a bit ambitious. They may have just told you that as an incentive to get you to pay off the card—who knows? There’s no doubt it will raise your score but the “charge-off” entry will ramain on your report regardless, so dont expect the score to go up by very much.
.July 26, 2011 at 5:48 am #189281
When a credit card is charged-off as bad debt, you need to understand that the damage to your credit is already done and there is no undoing it. Per the Fair Credit Reporting Act, a charge-off, whether paid or not, can remain on a consumer’s credit reports for up to seven years….Cutting a check for the full amount will not magically undo the damage of a charge-off.
Debt collectors will tell you anything you want to hear to get their hands in your pockets. If you’re going to pay off old-charged-off debt anyway, then you might as well negotiate the lowest, rock bottom settlement you can possibly get, being that the negative charge-off notation is going to stay for 7 years on your credit report, regardless of whether the charge-off is paid or unpaid. …Offer 25% and go from there. Send a letter like:
I am willing to settle this matter for 25% of the original amount. Your firm must send me a written agreement on your company’s letterhead that you will accept this amount as “payment in full” and that this issue will be settled. Upon receipt of this agreement, I will mail you a money order for this amount.
- Get all terms of any settlement deal you reach with debt collectors IN WRITING BEFORE you give them your money. This letter should state the settlement amount and that the account will be “paid in full” upon receipt of this amount from you. Keep the letter in a safe place. Never accept settlement deals over the phone that are not backed up in written terms.
- NEVER give out your checking account/bank routing numbers to debt collectors for making electronic debit payments. Pay only via USPS money orders.
- Settled/Forgiven debt is treated like earned income with the IRS…any debt that is forgiven must be added to your next year’s income and you’ll have to pay whatever additional taxesJuly 26, 2011 at 6:40 am #189282
If the credit card account has been charged off that is a derogative which will stay on your credit report for the 7 years, whether paid or not. Paying it off will NOT improve your score at all. The damage is already done.
However, creditors look at your whole credit report not just the score. Paid old debt always looks better.
Since it won’t help your score, you should negotiate the smallest settlement you can. A year old derogatory can probably be setttled for 75%. Lump sum gets the best deal. Payment plans must be short term. Get any settlement agreement in writing and do not give collectors direct access to your bank account.July 26, 2011 at 7:25 am #189283
Check it out here. It’s an excellent site with some wonderful options for you. It will definitely help you. Have a look.July 26, 2011 at 8:00 am #189284
Ask lenders for agreement to delete this items from your credit report when paying them. I recommend to get such agreement thru credit repair agency, for example this one – freecreditreport.hotusa.org
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