QUESTION: I have a six-year-old charge off on my credit report, it's sure to fall off in August 2017. However, this charge off has been sold to a collection agency, this reported twice on my report. The charge off shows a balance and is being “updated” monthly, which I believe is having a regular impact on my credit score.
In addition, the collection shows an increased balance (I assume is due in part to interest). I'd like to know if the charge off should show a balance and continue reporting, in spite of the information being sold to a collection agency? Also, I'd like to know if it's worth disputing this charge off considering the age? Thank you again for help in advance, have a great day.
ANSWER: Unfortunately, you are correct, a charge-off reporting monthly, with or without a balance, is having a negative impact on your FICO scores. While most creditors don’t engage in this practice, there are some that update regularly knowing the ongoing negative impact to your scores. Original creditors can report a balance on the charge-off until the debt is sold.
It is legal for a creditor to update a charge-off account monthly from the date of first delinquency which is approximately 7.5 years. However, there should be no balance reporting if the account has been sold to a collection agency. There should be a zero (“$0”) balance reporting. But keep in mind selling the debt does not remove the charge-off.
You should dispute the inaccurate balance and ask for a deletion of the account. The credit bureaus are not required to delete, they can simply correct the balance, but it does not hurt to request a deletion.
You should also dispute any duplicate reporting of collection accounts regarding the same debt. In other words, only the original charge-off account with a zero balance along with ONE collection agency regarding the same debt should be reporting. Sometimes a collection agency will go out of business but remain on your credit reports. If the collection agency has gone out of business there is a good chance of getting that collection account deleted.
Typically, I would not suggest disputing a charge-off so close to the removal date of 2017 because the “date of last activity” could update. Once the “date of last activity” updates it makes the account look more recent. But in your situation, the account is being regularly updated anyway. Plus, it is truly inaccurate reporting which at the least must be corrected – but hopefully deleted! The best of luck to you.