Charge-Off on Credit Report question

[Raptor4x4]

I went to try to make a vehicle purchase and to my surprise my credit report has a major derogatory, a charge-off of $1,200 from a jewelry store.

Backstory -Awhile back, I financed a piece of jewelry for a lady I was living with. I entered a verbal agreement with her mother that we would split the cost. Some time after that, we broke up & I moved out, however I didn't think to change my billing address with the jewelry company, because I had paid my half. Of course her mother quit paying the bill and they never informed me of the late payments - final notice - bill collector - charge off.

So I called the jewelry store, they sold the debt to collections & cannot help me.

I called the collector and they CLAIM they can remove the derogatory and will even settle for 50% of the amount owed (some kind of "special" they have going on this month only) Sounds like a load of crap.

Anyway, TL;DR I have a charge-off I was unaware of on my history that I'm more than willing to pay. Annnd I need to buy a vehicle. What are my options as far as repairing my credit?

[disneysteve]

Legally, the debt is yours. Any verbal agreement you made is/was worthless. You borrowed the money. You were responsible to make sure it was repaid.

The cleanest way is to pay what you owe. If the collection agency offered to settle for 50%, they will likely take less than that. Offer them 30% and see what they say. Once you agree on a settlement amount, GET IT IN WRITING. Once you have written proof that your payment will be final and they'll mark the debt as paid, send them the money by money order or cashier's check. Don't do anything that can give them electronic access to your bank account.

Once they record the debt as paid with the credit bureaus, that will improve your situation.

[Raptor4x4]

Thanks for the info Steve!

Questions: the Deorgatory on my report is under the name of the Jeweler; how can John Doe Collections remove the hit, if they didn't put it there?

If I settle for 50% (or 30%) will it be reported as paid in full or settled for less, & does it matter as far as a credit inquiry goes?

[disneysteve]

Thanks for the info Steve!

Questions: the Deorgatory on my report is under the name of the Jeweler; how can John Doe Collections remove the hit, if they didn't put it there?

If I settle for 50% (or 30%) will it be reported as paid in full or settled for less, & does it matter as far as a credit inquiry goes?

I believe it will get reported as settled for less, but I think that looks better than a complete default. I'm no expert on this stuff though so you ought to confirm that elsewhere.

As for correcting the credit report, they now own that debt so they can report it as paid/settled. When you get something in writing from them, make sure it states that they will do so.

[msomnipotent]

Collection agencies report to credit bureaus, not the store, because the store doesn't own the debt anymore. They are able to settle for 1/2 the amount because they probably paid the jewelry store 1/4th of the amount owed, if that much. If you settle, be sure to get it in writing that it will be removed from your credit report and not just reported as settled or closed. I think the person you talked to was wrong, and they will report it as settled (which doesn't look nearly as good as paid on your report. But if they are willing to remove it, go for it. Be sure to have them add when they will remove it, because some of them remove it in their own sweet time.

[dczech09]

Thanks for the info Steve!

Questions: the Deorgatory on my report is under the name of the Jeweler; how can John Doe Collections remove the hit, if they didn't put it there?

The answer is that the collection agency cannot remove the remark. The fact that they said they could shows just what kind of organization you are dealing with. They will lie through their teeth to get paid.

Since the jewelry store put the remark on your credit report, only they can remove it (or the credit bureau can if the remark was an error or an inaccuracy).

Like DS advised, offer 30% as payment in full. You already know they will accept 50%, so why not try for a lower amount? Whatever you settle on, make sure you get it in writing first and do not give them electronic access to your account. Money order or cashier's check only. I know this was already said a lot, but it is very important.

Moral of the story, do not purchase consumer goods on credit. Financing jewelry is not a good idea.

[disneysteve]

Moral of the story, do not purchase consumer goods on credit. Financing jewelry is not a good idea.

These deals are often 0% so as long as you are making a purchase that you can actually afford, taking the financing deal isn't necessarily a bad idea.

The problem here is OP didn't pay the bill which was 100% their responsibility.