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I'm trying to get preapproved for a home loan. My FICO needs MAJOR improvement. Rapid Rescore is suggesting I pay my balance on my Citi CC from $9850 down to $3320 inorder to raise my FICO by 45pts. The problem is that my CC has been charged off. The CA is willing to settle for 25%, yet the acct has NOT been sold and the CA is NOT reporting to the CB. The OC (Citi) is willing to accept payment however it must be the full amount ($9850). What should I do? That's a $7400 difference. I have the money to pay either company I just want to know which will improve my score the most
Hello guest, I would advise you to pay the original creditor. Once they sell a debt to a collection agency they take a deep loss. You could ask the OC for a pay for delete..meaning they do not put a bad mark on your credit for not paying the debt. Once it reaches a debt collectors hands you can still get a pay for delete BUT only the collection agencies mark will be removed NOT the original creditor.
Ok, how does this work? Will the "pay for delete" remove the entire history of that acct? If not, will it remove the "charge off" status that is reflecting on my credit report? I was told that "charge offs" remain on CRs for 7yrs...?
Hello Lorraine1,
Fireyone is right. Negotiation is very important here because your debt still is with the original creditor. The collection agency is just representing them in this case. The debt has not been sold yet.
If you settle for less, it will be a little harder to have them change the status of the account. Your main goal is to change the "Charged Off" or "Charged Off - Settle for less" status to "Closed account - Paid as agreed". Do not tell them that you are willing to pay the full amount in order to get that change. Negotiate, negotiate, negotiate.... BUT FIRST ---> Debt Validation!
Great reply optimist! I would recommend going through the original creditor and not the collection agency, even if it is one hired by the OC. They, the CA, may make promises that will not be agreed upon by the original creditor so why not get it in writing from the original creditor to begin with.
I would call today and not risk this being sold off to the collection agency for less. At that point you would then never be able to remove the original creditors mark. Try Try and try again to get them to list the debt as "closed-paid as agreed" but also keep in mind a paid debt is better on your report than an unpaid debt is. Also remember getting the promise to list your account as paid as agreed in writing Before settling the debt and remitting payment. Once you pay they will have no ambition to keep their promise UNLESS it is in writing!
Thank you sooo much for the advice Fireyone & Optimist!! I really appreciate it. I've talked to the OC and they WILL NOT accept any payment arrangement or settlement. They will only accept payment IN FULL ($9850). I assumed the best way to handle this would be to pay the OC and NOT the CA... I guess I was hoping I'd settle w/the CA and save myself $7400 and still get the 45pt increase on my CR that I so desperately need to prequalify. So do I need to do Debt Validation even if I'm dealing w/ the OC... and is a Pay for Delete seperate from asking them to change the status to "Paid as Agreed"? Thanks again!!
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4mRAkI Thanks-a-mundo for the post.