Hi all. I haven't been here in awhile, and am happy so say my credit is in much better shape now. I do still have an issue or two I need to fix. Quick background: I went bad on a Chase credit card and ended up settling on payments on a balance of about $28,000. My credit report shows all the nasty yellow, red, and black CO marks showing late payments in the tradeline. So here's the upside. My balance is now about $20,000 and I'm in a position to pay off the whole thing. I've heard of "pay for deletion" in this forum, but I think I also heard that it really doesn't work. Ideally, I'd like to pay the balance in full in return for them to remove the entire tradeline. I've been making payments on time through the payment plan, and figure they have about zero incentive to do anything but continue the agreement as is. I need to get my credit score up and I'm sure even if they won't change the tradeline, at least a "0 balance, paid in full" would help the score. Recommendations? Thanks, bushka
Even if PFD doesn't work (and it can't hurt to ask). If it's closed and paid, chances are in a year they'll flush the account from the system so that if you dispute it through the CRAs in a year or year and a half it'll just go away.
Chase is one of the biggies. Biggies spend the money to keep their records on the computer a long time. I wouldn't count on them archiving it such that they can't verify in time. Work the PFD angle hard till you get it...
Each one is different, but BofA is a "biggie" and they dumped one of my records after a year. As they say on the internet, YMMV.
My thought was to call them and explain the opportunity to have this thing paid off now instead over the next several years. I don't know if that is enough incentive for them to do the PFD. I could try to talk to a manager, but is there any better way to go about this? Thanks, bushka
See if there's a "loss mitigation" department you can speak to. One potential story would be that your income is more "up and down" than you thought, that's it's worthwhile to pay the money if you can put the account to bed with a delete, but if they don't see it your way you just want to let them know that down the road both of you might well find yourselves again in the situation where payments aren't being made. See if they bite.
If they are charging and collecting interest on the balance, why would they be in a hurry to have it paid off? It seems to me that the longer you make minimum payments the better it is for them. Remember, to the credit card industry, the deadbeats are those who pay their balance off every month.
I'm going against the grain here but, paying a 20k account would help your scores regardless of whether it remained. That is to say, you're putting a huge delinquency behind you and improving utilization by 20k. I'd pay it but, just settle it. They won't delete it. Zeroing out the balance is the most important thing here.
They might want it paid off ASAP because of the category it's in on their books. Regulators can get antsy if too much is in the wrong category (and the economy is causing that to happen). Of course paying it off would help. But deleting it might help more. Explore with them whether they'll do that. If not, pay it off 1/3, 1/3, 1/3 over 3 months. FICO likes that better.
ccbob: The interest is already figued in and I pay a fixed amount. It was $250/month, then $350/month, and will go up to $750/month in about 6 months. At the time, I figured I'd worry about the $750 when it came up as I didn't have as much cash flow then. I don't think they are going to lower the balance due just for paying off early. apex: That's what I figured. In fact, my mortgage guy said he didn't care if the tradeline is there or not, as long at it is a 0 balance. In any case, it sounds like the consensus is to give it a try, but don't hold my breath. bushka
That's interesting. Amazing how those calculations work. As I'm trying to get my credit score up ASAP, do you think after the third month is over my score would be better if I only pay 1/3's as compared to paying the whole think now? That's what I assume given your comment. Thanks, bushka
Just throwing this out there for discussion, would a settlement agreement with a confidentiality clause work?
Personally, I think you're better off to adopt the following: 1) Offer settlement for deletion. When they balk . . . 2) Offer settlement for a neutral listing. When they balk . . . 3) Just settle it and move on. I wouldn't pay in segments insofar as it will be additional derogs on your reports and make the date of status that much more recent. Again, getting that potential encumbrance out of the way and eliminating the balance will do a lot on a manual review. There may be some things on your reports you can delete otherwise or tweak here and there in order to elevate your scores.
If I understand the OP correctly, he's current on the closed account now, so the new payments are not generating additional derogs. Even if they are, a whopping payment of 33% of the amount certainly won't generate a derog (unless it's late). The FICO issue is that when you use a big chunk of money to suddenly zero out an account, apparently the FICO model is tweaked to assume that you've accessed a line of credit that simply isn't reporting (yet ... perhaps ever). But spreading the payments out a bit seems to give a better score increase. When you see paragraphs on FICO forecast models, they all seem to assume a 24 month payoff for best FICO effect. Who has patience for that? Some of that is going to come simply from additional months of history being added. But there is something to be said for the idea that FICO penalizes sudden and inexplicable payoffs--you may not get all the bounce that you would expect to from the reduction in utilization ... at least until, perhaps, that lower utilization "seasons"--and if that's the case, why front the money.
Excellent information to consider before making large payoffs. Would the same be true for those playing the balance transfer game? Or those taking advantage of no money down and no payments for three years offers on furniture?
You're correct, I misread or failed to read that the account is actually current. Your information regarding FICO makes sense and is well reasoned.
So here's the latest. I talked to the attorney first, since this account went into collections (but didn't get to the judgment stage), then called Chase regarding removal of the tradeline. I couldn't get them to remove the tradeline, but they did come down significantly on the amount due. The original principal was about $29,000, and with interest over several years of payments, it would have been about $34,000. They took off about $4000 I had already had paid from the original principal, and then took 85% of that figure, which was $20,660. They said they would take $20K, and then went down to $19,500, but that was their rock bottom. They offered to take a lump sum, of course, or would take 3 payments. They are going to send payment for the lump sum. It will show "paid for less than full amount" which won't raise my score as quickly or as much as "paid in full" but I would have to pay more than $4000 more to get the "paid in full" status. I don't think it is worth it, but I suppose it could be argued that it is. Now, the interesting part... I talked to my mortgage guy who has been helping me get ready for a somewhat complicated renovation financing. I called him last night to explain what I was doing, and he said that HE could remove the tradeline so that it doesn't impact my credit score. He said that the tradeline will not actually disappear from my report, but that he can "turn it off." He says that Chase is reporting it as open and active, which they will do even after the balance is 0. The the 3 credit reporting companies use this tradeline in calculating a score because it is "open and active." Somehow, he turns the status off so that the credit companies don't use it in calculating a score. Does this seem right? In any case, he is going to do something for all 3 delinquent accounts that I had (the other two were settled and paid). I may not have the details on that exactly right, but he did say he will turn these tradelines off so the CR companies don't use them in their score. We'll see what happens. bushka
It sounds like a rapid rescore-based gambit. Your mortgage broker knows the truth of the situation. If he uses the rapid rescore system to cause your report to reflect otherwise ... he is crossing right into mortgage fraud territory and he's taking you with him ... one of you is the fraudster, one of you is the accomplice ... without reading the statutes and applying them to what's going on, I'd say the OP is the fraudster and the broker is the accomplice, but who knows. The good news is that this is fraud for land, so the FBI doesn't care too much about it. Fraud for money they would prosecute. They'll leave this one to the state's attorney. YMMV ... or there may be no mileage because you're behind bars and not going anywhere.
P.S. - I do not think Chase will report as open and active when the balance is zero ... I think your mortgage guy is confused somehow, or is misleading you and he intends to affect some attribute of the account he is not accurately representing to you. In any case, it's very fishy and my warning about mortgage fraud stands.
