CREDIT ISSUES EXPLAINED
What is a credit scoring?
a system creditors use to help determine whether to give you credit, and how much to charge you for it
"credit worthiness" comes from calculating your credit history against a system called the Fair Isaac Model
the number and types of accounts your have
age of your accounts
scores range from 300 - 850
among the most damaging negative items on your credit report
signals to potential lenders that you're a risky borrower
means you've stopped paying off a debt and the creditor records your account as a lost cause
charge-off does not mean forgiven
Negotiating a settlement:
determining who owns the debt
gathering details about the debt
offering a settlement amount
requesting a "pay for delete"
getting the agreed settlement in writing
Should I pay it off?
Paying a closed or charged off account will not typically result in immediate improvement to your credit scores, but can help improve your scores over time
What happens if I don't pay it off?
if you choose not to pay, it will continue to be listed as an outstanding debt on your credit report and you may have issues getting approved for loans
What happens when you pay off a Charge-Off?
score will not increase immediately
will need to continue paying all your other accounts on time and handle your debt responsibly
It will stay on your credit for 7 years and 180 days from the date of the first delinquency that led to your account being charged-off
if you settle your debt after a charge-off, you will be issued a 1099-C form from the creditor as long as the amount paid to the creditor or collector includes a savings off the balance of $600.
the difference between what you owed and what you settled for may be considered a taxable income
DON'T IGNORE A CHARGE-OFF