What’s the difference between a Collection Account and Charged Off Account?

What is the difference between a Collection Account and Charged Off Account?

The quick answer is that there is a huge difference between how each can affect your credit score. On your credit report accounts can be categorized as either a Revolving Account - "R", Installment Account - "I", or Other Account - "O". A collection account is neither a revolving or installment account, and is therefore categorized as an Other Account. The balances for "O" accounts does not impact your score, so whether you owe $0 or $10K your score will not change. The greatest impact "O" accounts have on your score is in regard to their Date of Last Activity (DLA). The newer the date the more it impacts your score, which is why paying off collection accounts will usually lower your scores as it will renew your DLA.

Charged Off Accounts are more likely to be reported as Revolving Accounts, and therefore will affect your score differently. For example, "R" accounts not only consider the DLA but also the Balance Due. That is why whenever you are maxed out on a credit card account it has a dramatic effect on your credit score. The dilemma in these situations is trying to decide what is best - will it affect my score more to have the maxed out account charged off or to settle the account for less than agreed only to have it renew the DLA?

In those cases, we suggest a FREE consultation from our friends at National Credit Care. If you are a business owner, you can't afford to have sub-par credit. You work hard for your money. Save more of it by getting your credit score up as high as possible.

How Much Does Your Credit Score Really Cost You?

What Is 1 Percentage Point Among Friends?

A while back our partners at National Credit Care sent us some shocking information. We know that someone with a relatively high credit score is more likely to receive the most aggressive terms compared to someone who has relatively average credit. We see this almost every day. What we don’t see is the potential savings over time that a client could earn with a little more focus and attention to their credit score. Lets go over some fun math!

Sample Scores & Rates from MyFico.com on a 30 year fixed mortgage loan for $250,000

760-850       3.447%

700-759       3.669%

680-699       3.846%

660-679       4.060%

640-659       4.490%

620-639       5.036%

The Difference Could Be Worth Half Of A Million Dollars or More!

In this example, the difference between what a person with a 639 score pays in interest versus what a person with a 700 score pays in interest is $78,000 for this one loan. That is a lot of money all by itself, but now consider all the other loans that one typically pays for in a lifetime; auto loans, credit cards, bank loans, etc. That could easily be a difference of over $100,000 because of the higher rates associated with those loans. If you have $178,000 to invest over 30 years, you could conservatively earn more than $325,000 with that money over that time period. Add that to the amount you paid in additional interest and a slightly lower credit score over 30 years has cost you at least half of a million dollars!

Isn’t It Worth Getting Your Credit Scores Up?

Don’t live with a low credit score. Contact us today and we will order you a free, no obligation, credit consultation call from the experts at National Credit Care. They will tell you exactly what they can do for you and your credit. And if you decide to enroll in one of their programs, Kingswood Leasing clients receive promotional pricing.

Request your free credit consultation today!

Deleting Accounts That Negatively Impact Your Credit Score

The Problem:

A collection account reported to your credit bureau and is negatively impacting your credit score. You may have worked out a payment plan with the company or negotiated to pay off the account for less than the balance owed. These companies have little incentive to fairly and accurately report to your credit bureaus. This is a violation of the Truth in Lending Act, however, violations are rarely prosecuted.

The Answer:

When our client’s sign up to have their credit scores maximized with our credit repair services, one of the first actions our credit repair executives take is to aggressively seek a permanent deletion of the account as it pertains to the Fair Credit Reporting Act. The way the bureaus score collection accounts makes this the best option to pursue because even updating the information on this tradeline could potentially lower your score, even if you are paying as agreed. The most effective way to increase one’s credit score that is being negatively impacted by a collection agency is to remove that tradeline from your records altogether.

Do You Have Collection Accounts On Your Bureau?

Don’t live with collection accounts bringing your credit scores down. Your credit score is your first, best option to secure capital and assets. It is too important to be left in the hands of people working at collections agencies. Contact us and we will work to delete these negative accounts and increase your credit score.


Tax Lien Removals

There Are Only Two Things Guaranteed In Life…

So you’ve heard this one? One thing is for sure – no one likes paying taxes. Just ask Wesley Snipes and Willie Nelson.

This credit tip won’t help Wesley and Willie, who owed substantially more than $25K in back taxes, but for people with federal tax liens under $25K, there is an IRS procedure that will remove these federal tax liens from a credit report. All one needs to do is make three payments on an agreed upon payment plan and submit the proper paperwork.

This is just another example of the assistance you can receive from our Credit Repair program. Good credit is a major factor in obtaining any loan, and the stronger your credit, the greater your ability to save hundreds to thousands of dollars of your money!

Our Credit Repair program works with you, not only to remove inaccurate and unverifiable items from the credit bureaus, but to increase your credit score. A stronger credit score will allow you lower rates for credit purchases.

Don’t live with a low credit score. To learn more, and start the process to increase your credit score, Apply Now to our Credit Repair program. A representative will contact you within 24-48hrs to discuss options specific to your credit history.

Common Credit Mistakes

Common Credit Mistakes We All Make But Shouldn’t

Paying Off or Settling Collections

This is generally a bad idea, as it will cause your score to drop as your activity date gets renewed. However, let’s say an underwriter is forcing you to take care of it for a loan. We suggest paying off the collection account right before closing the new loan and provide the paid-off document to the underwriting department. This way the payoff doesn’t have time to negatively impact your score.

Closing Down Revolving Accounts

Most people do not realize that closing out trade lines can significantly lower credit scores. You need at least one revolving account to meet the minimum criteria of the scoring algorithms used by all three credit bureaus.

Paying Off Auto & Student Loans

When you pay off your installment accounts they close naturally, and then you lose your length of credit history. A better approach is to simply pay the minimum amount for as long as possible.

Student Loan Collections

Most student loans are government backed so they don’t just disappear after a certain amount of time. And very few lenders hand out significant sums of capital with student loans in collection status. Therefore, we suggest getting on a new payment plan and making sure that part of the payment plan includes a requirement that the status of the loan(s) be put back into good standing.

Acquiring Positive Credit

When it comes to building up credit history, don’t go nuts – less can be more. Apply for one secured credit card and use it sparingly each month. Make sure you have at least three open and active trade lines at any time. You can even try acquiring a couple of positive credit accounts from a close relative.


Disputes are nightmares in the credit world. We work with a company that specializes in disputes. Our suggestion is to let one of our representatives handle any disputes that you may have. Knowing exactly what the laws are and having the experience and tools to actively handle a dispute can be the difference between a high and a low interest rate, or getting approved for financing at all. Let the people who specialize in this area take care of your disputes before they cost you more than they already have.

Request A Free Credit Consultation Now!

Don’t live with a low credit score or a disputed trade-line. Request a free credit consultation today and get the information you need to make an informed decision. A credit repair specialist will respond with a specific plan to improve your credit and present you options to move forward. There is no obligation to move forward, but if you do you will receive Kingswood’s promotional rate as a benefit. Learning what you can do to maximize your credit score can literally save you thousands of dollars of your own money. Don’t delay – request your free credit consultation today!