Charge-off / Settlement

[themooser]

I recently had an account with Bank of America settled, but I checked my credit report this morning and it is reported as a charge-off. I settled with MBNA in the same manner and it is reported correctly on the report as a settlement.

Is there a big difference in the way they are being reported? I'm pretty sure that it's really afecting my credit score.

Thanks.

[willingtocope]

I'm not certain which is worse, but they are both "dings" on your CRs. They do essentially mean the same thing and you need to watch out for other little surprises they may throw at you. For example, if you settled for less than the full amount you owed, and the balance was more than $600, you should be getting a 1099c in the mail...on which you'll have to pay income tax. You may also find that, depending on the wording of your settlement agreement (assuming you got it in writing), you may find a JDB coming after you for the balance.

[themooser]

Well, I'm well ahead of you. I already got the 1099 for one(this was done last year), and I had a CA try to collect the balance on the other. I was able to fend them off, however, since I keot the settlement letter and proved that I did not owe the balance.

And yeah, both are pretty good dings, but I believe one is worse than the other. Can a charge off even be disputed?

[willingtocope]

Of course, anything can be disputed. Question is will the OC verify it and therefore it sticks on your CRs. With Charge Offs, its hard to tell. I've read some stuff on the internet that says some CC computer systems are set up to "archive" records of inactive accounts after some period of time...2 - 4 years maybe. Once they're archived, they're no longer available to automatically verify. On the other hand, some systems are built around "punishing" us evil wrong doers credit wise, and therefore always ding you up until the 7-1/2 yr mark.

Bottom line - give it a couple years, and try disputing as "not mine". You might get lucky.

[breathing_easier]

And yeah, both are pretty good dings, but I believe one is worse than the other. Can a charge off even be disputed?

Yes, a chargeoff can be disputed, especially if the account has been settled. If "Chargeoff" is the only status listed, then that is inaccurate. If it says something such as "Settled After Chargeoff," then that is accurate. Of course, it doesn't help your FICO score much because any Status with "settled" is viewed unfavorably by FICO. However, if a lender is ever doing a manual review of your reports it may take into account the fact that you did settle the account and that it isn't simply an unpaid collection. You might want to first send a goodwill letter to the OC and plead with them to update the TL to positive status. If that doesn't work, as willingtocope suggested, wait a bit and then dispute the TL with the CRAs as "not mine." You will probably want to let the TL age a bit before doing this, because if the settlement was fairly recent chances are the OC will still have up-to-date records.

I settled all of my unsecured debt in 2002 before finding this board or educating myself about credit repair. At first I was uncomfortable with the notation of disputing as "not mine," a TL which I knew to be mine. However, after numerous goodwill letters and disputes with the CRAs for reasons other than "not mine," I finally disputed several settled accounts as "not mine" and miraculously one was deleted and one was updated to "Pays as Agreed."