Mortgage and unpaid charge off's... Interesting situation, need some guidance.

Discussion in 'Credit Talk' started by jdog0411, Jan 13, 2015.

  1. jdog0411

    jdog0411 Well-Known Member

    I am interested in purchasing a new home, and have a question regarding a couple of unpaid chargeoffs that appear on my credit reports.

    The first one is a USAA Mastercard that charged off in 2009 (first date of delinquency was 1/2009, so this account will fall off the reports in a year). The balance is on the high side at 15K. There is no collection agency to deal with on this, just the tradeline from USAA.

    The other is a Citifinancial personal loan with a balance of 6K that charged off in 2009 also, with a date of first delinquency of 12/2008 so it falls off the reports in 11 months. No collection agency to deal with on this account either.

    Ordinarily I would just wait the year until these fall off and not mess with them, but my timeline has been accelerated due to wanting to apply for a mortgage. I spoke with USAA and Citifinancial, and both would accept 50% payment to settle the accounts. They did not seem agreeable to deleting the tradelines in exchange for payment even though these fall off within the year.

    I know that a payment on these should not re-set the 7 year clock, but I'm not sure if it would re-set the clock on the SOL. The SOL is 6 years in Colorado, so as of now I should be safe from any law suits for collection on these.

    The problem I'm having is the USAA account is reporting strangely on the reports. It is correctly showing as a charge off and is "closed" status on all three reports, but I still get a notification of a new derogatory account reported on my credit alerting services each month. Whenever I check what the derogatory is, it's always the USAA charge off. When I look at the trade line, nothing appears different, and the original date of delinquency is still the same. There is, however, a newly updated "amount past due" noted on the account, that increments up by a couple of hundred dollars each month. I believe this is making it look to the FICO scoring system like this is a recent late payment. It also appears that myFico is counting the balance for the USAA account as part of my revolving balances, and is including it as part of my utilization which is not correct. Has anyone else experienced this or know if this is normal? Can the past due balance be updated every month on an account that is charged off and closed? If this is affecting my FICO scores, than I believe the account going to zero balance would probably give me a 30 point bump in my scores, even with the paid charge off still showing on the report.

    Should I pay these off? Would my chances at getting a mortgage be better with these paid off, or would the mortgage company require them to be paid? Lots of factors at play here and looking for the best approach. I also don't want to blow thousands paying these off if it isn't going to make a difference anyway.

    Thanks, and sorry this post was so lengthy.
     
  2. jam237

    jam237 Well-Known Member

    It's not making it look like a more recent late payment, just unusual for a company to keep an account on the active report reels for so long. Interest still accrues, which raises the balance, just usually by now most companies don't want to keep reporting.

    I typically wouldn't pay unless the perspective lender requires them to be settled to approve, because they don't improve score either paid or settled.
     

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