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Chase Charge-off six months ago - should I settle debt or leave as is?


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About me:

I am 29 years old and am considering graduate school in the coming two years which may require me to move back to the U.S. I worry about my current score and circumstances affecting my ability to rent an apartment or take out student or car loans. I have a current FICO score of 605 with credit union scores around the 590s.

I have recently paid off a five year car loan and have three other cards in good standing. Two cards never carry a balance for longer than 1 month and the last card ($2900) is paid off regularly. I have two cards that are charged off. One of them has been settled for less than the balance. The other is 

My problem:

I have an account that charged off for $675 with the Chase Slate Card. It was an honest and stupid mistake not to pay it as I was perfectly capable of paying it but was living abroad, had forgotten I had transferred a balance to this account, did not receive email notifications of delinquency, and family who received all statements/notifications failed to notify me that the account was delinquent. 

The account is showing as delinquent in January or February of 2015 and having charged off six months ago. 

If I am trying to rebuild my score, is it better to contact Chase and seek to repay the full debt or should I leave it at this point, assuming the damage is done? Is there any danger or risk in contacting Chase? 



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  • 2 weeks later...

Even if something is charged off, it'll impact your score much less if the debt is paid. The credit scoring model was updated in about 2014 to reflect this change. A payment on an old debt used to not matter much - if you had something derogatory, it didn't matter if it was paid or not; it would harm your score regardless of its payment status.


"Consumers whose credit files are tarnished only by unpaid debts that went to collection agencies--but were ultimately either settled or paid--can expect to see a big increase in their credit score of 100 points or more. With the new methodology, if you pay off a collection debt so that it shows a zero balance, it won't hurt your FICO score. FICO 9 forgives you once you make things right with the collections agency and pay the balance."


So, the important concept here: "FICO 9 forgives you once you make things right with the collections agency and pay the balance."

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First contact Chase to make sure that it still owns the account.   If it does, make arrangements to pay and get every detail in writing.   If Chase to were to screw up somehow, you'd want to be able to prove you paid the balance and that the account was settled in full.

Whether or not your score goes up, future creditors may take into account the fact that you didn't let a delinquent account go unpaid.

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