“Settled for less…” is a charge off, which is a major derogatory.
A paid charge-off is also a major derogatory.
FICO impact depends on what else is reporting.
If no other major derogatories, the FICO drop will be dramatic and the impact will last for the entire ~7 years it reports (although the impact will gently go down over time).
On an already dirty profile with other major derogs, FICO may not flinch.
If by “Paid in Full” OP means that they’ll update the account as paid in full/closed/never late, no harm.
You are looking at it the wrong way, it won’t affect your ‘score’ for long, but any finance guy worth his salt (and job) will see ‘Settled For Less’ and even with an 800 it’s gonna be rough. Sorta like ‘Bankruptcy’ You can have a 800 score but a BK will make most credit guys flee
Same thing happened to me. I transferred out of my lease that had six months remaining. Once the account was closed, my score dipped like 40 points. Even though a lease was paid off. BMWFS put a remark saying “affected by natural disaster” even though I never took any payment breaks for Covid. I called them up and said what the heck? Apparently one of the agents marked that on my account by mistake (he was marking everyone that called in as seeking covid relief). They told me this remark shouldnt impact my credit yet my score dropped 40-50 points. They said they will remove the remark (like 2.5 months ago) It’s still on there. I also filed a dispute with the credit agencies. Not sure if that will change anything. My account was paid on time via autopay for 29 out of the 29 months I had the car. No missed payments or anything. One stupid remark of “affected by natural disaster” and my score tanked.
I didn’t ask for any assistance or payments plans. And even paid the lease in full 6 months early. I don’t get it. There are no remarks that I see other than paid satisfactorily.
You can see here my score went up, the loan got reported as paid, then out of nowhere my score dropped. Nothing else changed on my credit, and if anything my revolving and installment accounts decreased in balance. this is infuriating
That was directed at a different poster, but that’s okay…
The contents of your reports change all the time. Examples:
Also, time does not stand still. Everything on your report ages with the passage of time. And accounts fall off ~10 years after they are closed.
Unless the score change moves from one tier to another within a specific creditor’s requirements
on an application you’re going to submit immediately, 14 points (in either direction) on a model that ranges from 300-850 is irrelevant.
And within tiers, as an example: 830 is no worse than an 844, nor is 850 better than either of the other two.
Oh sorry these forums confuse me a bit. I didn’t drop tiers thankfully. Just was hoping this would be a boost to my credit. Sucks to pay something off and have it hurt your score.
Generally speaking, an installment account that is nearly repaid is an asset to your credit report, but the impact of the trade line (aside from its age) ceases to add much of anything to your FICO once the account is closed.
The impact is really pronounced if you have no lates or major derogatories and then you go from 0->1 installments (big jump) or 1-> 0 (big drop). Going from 3-2 or 2-4 open installments doesn’t do much.
A little off topic, but tried searching and couldn’t find a clear answer. Will an early lease buyout (personal or through a dealer/carvana) report as paid in full/closed/never late on credit? Is that correct?
Or is there some negative indication since the contract was ended early?
The lease was the only open account one my CR. 29 months of age. All payments on time.
I got another BMWFS lease, which hasn’t been reported on my CR yet.
If that was your only open installment, when you go from 0->1 installments you should see a similar increase.
Of course you will also have a new account reporting, which will bring down your average age of accounts, so that will somewhat blunt the increase.
Also note that when the new lease starts reporting and you get a new FICO afterward, the new FICO will also reflect everything else that has changed on your reports since the old lease dropped, so you really won’t be able to isolate the exact impact of the new lease.
I mean, mileage is the most important thing for dealers tho. it’s not surprising they went after you
as far as credit: your credit most likely declined because you closed the account. Even if there’s nothing bad on the account, closing it will lower your score. Credit score wants you to never close accounts, never have a balance, so yeah
