Citibank has a small balance (less than $100) from several years ago on a checking plus account that they are reporting as "bad debt - write off." I JUST FOUND OUT ABOUT THIS NOW when I was applying for a student loan. I called them and they agreed to settle it with me and they say they'll stop reporting it as a bad debt. However, when I asked that they take off the history of it as being unpaid as well, they refused. They said, "we won't delete the account." I told them I'm not asking to delete it, but simply to show that it was fully paid and there was never any problem with it. They basically said they wouldn't do this. So, my two questions are: (1) if I pay the amount, will it show up on my credit report as 0 balance, but they'll add a history of non-payment or something of the sort? Basically, what happens when you settle accounts and what does your credit report look like for that account going forward? (2) is there any legal remedy I could threaten them with in order to get them to report it as fully paid? I think I have a strong case b/c I closed the account years ago, was never informed of this until today from my educational lender and it's such a small amount so it's not as if I was attempting to skip out on it! But I'm willing to assume I owed this just in order to get them to report it completely clear. If they won't do that, which they seem to be saying they won't, I'm assuming I should dispute the charges to begin with and not pay them. Help?!
If it went into collections and it's not paid, it shows as an unpaid collection account. If it went into collections and it's been paid, it should show as a paid collection account. Unfortunately, a paid collection is just as bad as an unpaid one insofar as your FICO is concerned. It may, however, look better to a lender if it's been paid. That just depends on the lender, the loan, and what went into collections. The Bad-debt entry is likely to remain for the rest of the 7-year reporting period. There's no real legal remedy if they are reporting it accurately. They can't (or at least they aren't obligated to) remove the history. That's not to say you can't clean it up later, just that they have no legal obligation to erase the past.
