I am no expert on the inner workings of FICO but I would suggest that your client’s “stellar” credit is now down the tubes. Charge-off is the worst end result of any credit decision. Lenders expect their loans to be repaid and having to charge-off all or part of any debt is a very poor reflection upon the borrower. My understanding is this statement will remain on the credit report for 7 years.
It’s a hit to her score. For scoring purposes it’s really no different than a foreclosure but who knows if that will change in the future. But short sales or settling accounts for less then owed ( same thing)makes recovery faster and makes new loans available faster. A short sale recovery time is 2 years while foreclosure is 5 years.
RE: i would think a charge off you could settle it then have it removed from your credit?
A bank is not going to take a settlement for deletion of derogs on your credit report. Typically only debt collection agency will do that and that is only for the debt collection agencies trade line not the original creditors so it wouldn’t apply here. That’s not to say you couldn’t dispute it.