Quote:
Originally Posted by joninbellevue
Really... That is wicked weird. I'll pay it off when my refi goes through and let you all know how it goes.
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There are several factors that hurt you on this type of deal. Part of FICO is determined by age of accounts, and the amount of time since the negative account happened. As time passes, the negative account hurts your score less and less.
If you make any changes or updates to the account, the Date of Last Activity (DOLA) changes to a recent date. The way they will report the account, it will appear as if something negative happened very recently, and you lose the benefit of the time since the negative happened.
Also, depending on your file and accounts, an old charge off falling off could cause the score to fall as you lose an account that is old and adding to the length of your credit history.
This has happened to many people, and is completely stupid. Any negative coming off the report should raise the score, not drop it. This is just one of the many problems in a highly flawed system.
If you are not required to pay off the balance of the settlement to qualify for your loan, you may want to do nothing. If your score goes down, you could end up with a higher interest rate on your loan.
