Help with What to Do-Webbank DFS negative item

[guatemama07]

Hello, I am brand new here. I have read the introductory posts first to start. I have a question/need advice on how to understand and deal with something on my credit report. I am working with a mortgage broker, and he mentioned this item on my credit report as one that I should deal with to get my score up.

The account states "Web Bank/DFS." I think this must be the OC, because it is for Dell computers, and I think I did have an account with them at one point. The account is dated as opened 1/2007 and says that I owe $1939.00.

The credit report says "Type of Loan: Charge Account." Immediately underneath, it says "PAID; CHARGED OFF ACCOUNT; CHARGE OFF; ACCOUNT CLOSED BY CREDIT GRANTOR."

I am confused as to the best approach to deal with this. I don't want to make it worse, so does anyone have advice before I act?

Thank you!!!

[Lian]

It appears that the OC charged-off the debt, which inherently closes the account. At the time of their CO, there would have to have been a delinquent debt. From there, the path grows murky.

Did you pay the debt after the charge-off? Was the debt referred or sold to a debt collector?

Often, the reporting of two names separated by a slash (/) is shorthand for the first being the OC, and the second the debt collector.

There is a collection agency called "DFS" Has a debt collector ever contacted you or sent you a collection (dunning) notice?

Is it reporting in your CR under OC accounts, or under collections?How to address the debt and its reporting depends on the answers to those questions.

[guatemama07]

Yes, it is correct that this is a charge-off of a delinquent debt. I did some research and learned that Webbank/DFS means Dell Financial Services, so I think this is the original creditor--but I'm not certain if they sold the debt to someone else. However, from the credit report which I am looking at--which I got from my mortgage broker--it appears that this is a debt to the OC.

It's correct the debt was delinquent. My husband lost his job and we couldn't pay it.

My husband says we have not been contacted by a CA about this, which also reinforces my belief it was just written off by the OC as uncollectable.

My big question is should I take any action on this? I am not sure what would really help my credit score. It would be very difficult to pay in full all $1900. My husband thinks he talked to Dell Financial about 6 months ago and they didn't want to budge on the amount.

It is hard to understand credit scoring and what is the best course of action. We are trying to get my credit to a 620 and do an FHA mortgage. Thanks for any advice anyone can give.

[Hal Jordan]

Well you have a couple of options and one of those doesn't seem to be viable as you say you don't have the money to pay it off. I can see that but on a bit of a side note did you know with an FHA loan you're looking at a minimum of 3.5% purchase price as a cash down payment on your part?

First option is to just dispute it directly with all three credit bureaus and hope the OC cant or won't validate it and it just gets removed.

Second is to request a 623 investigation from dell asking for detailed information on the account. Date opened, statements, payment history, missed payment dates etc.. and hope they can't give you that information and delete based off of their inability to verify it.

Third you could call them and see if they have sold the debt to a collection agency which IMO is the most likely. I suspect that they have sold your debt to a CA/JDB after it was charged off and the CA just hasn't reported to the Credit Bureaus yet. OR they just didn't report to the particular Credit bureau your mortgage broker pulled your credit report from.

4th of course is to offer a pay for delete to either the OC or the CA (which doesn't sound like a financial option for you at this time)

Be aware this could "Wake a sleeping giant". If you dispute it with the CRA's, do the 623 with Dell or call and see if it's been sold it could re-start collection activities from DELL, the CA who may or may not have purchased it and or possibley get them to sue you. $2000 is not a small enough amount that they would probably just walk away from you guys and let it go. Someday someone will come after you guys for this debt. You just have to hope the SOL has expired when they do.

The number one thing you want is for this to be removed. PFD is what is going to give you your best chance but disputing it and having it removed because the OC just doesn't have the records anymore or doesn't respond is the most financially beneficial to you as what that does is basically let you off the hook for the money and the negative fall out from not paying a bill. Not very ethical.. but hey, I'm not Jiminy Cricket and I'm certainly nobody's moral compass. I've been there, done that for whatever reason and I've gotten lucky a couple of times myself with a debt.

I wish you good luck with whatever you choose to do. I just wanted to let you know the possible consequences (good and bad) that can come of trying to get a debt like this removed.

Others here might recommend a different course of action. But if it were me personally I would try disputing the debt with the Credit bureaus first before doing anything else and hope it will just get deleted and no longer be a factor.

BTW, The worst things for a credit score are Bankruptcy, Charge Off's, judgements and collection agencies.

[guatemama07]

This reply is very helpful. Thank you very much.