Will paying old debt help or hurt credit score?

Question

I have 2 old credit card accounts, one is collection and one is showing charged off as bad debt , that I could payoff in 2 yrs, or I could do nothing and they will rotate off in 4 more yrs. If I pay off the accts, will it improve my score or hurt it? I'm afraid they'll be on my report for 7 more years from payoff date (9 yrs from now) even though finally paid because they were collection accts.

Answer 1

Wow. Lots of conflicting stories here and incorrect information. Here goes:

If you start making payments and then GO LATE AGAIN, then it will restart your 7 year reporting period. However, if you start making payments and are NEVER late again, then the START of the LAST time you had a late payment is the start of the 7 years (it's actually 7 years 150 days.)

If you should pay it off or not, is up to you. If you can get the company who charged the debt off to accept a payment on it, then they MUST take it out of 'charge off' status and just show it as having been late. If you can't get them to agree to that, then paying a collection company that now owns the debt wont help you with THAT charge off. It will show a balance of $0 on the collection account which will SLIGHTLY improve your credit score, but not by a lot.

The 7 year period does NOT relate to them being paid off, it relates to LATE payments and DELINQUENT accounts.

Answer 2

Some of the other advice is very poor. First off call the original credit card companies with the original card numbers in hand. Ask them if u can work with them directly. If they will allow it, dicker. Get them to cut the debt in 1/2 and stop the interest. Then set the monthly payment at a rate u know you can pay every month. Be sure to get everything in writing and the acknowledgment that you contacted them and that the new deal will replace whatever is out there now on your report and that they will update the report periodically as they do for all creditors. The final step is to keep good records on your side so that they live up to their side of the deal. If they won't erase the old accounts until you have paid off the two new arrangements then that is a reasonable position for them to take; just get it in writing. The law says 7 years from when you stopped paying they drop. But check with the Banking & Ins. Dept or Consumer Protection Agency in the state where u live. Never, ever use one of those debt consolidation agencies unless u happen to like paying more money than u owe. The account is a loan with the bank but once u default and it's in collection or charged off, its a whole new ball game. Good luck.

Answer 3

One of the vital different recommendation could be very bad. First off name the original credit card businesses with the common card numbers in hand. Ask them if u can work with them immediately. If they're going to enable it, dicker. Get them to reduce the debt in half of and stop the curiosity. Then set the month-to-month cost at a cost u understand which you can pay each month. Be definite to get the whole thing in writing and the acknowledgment that you just contacted them and that the new deal will replace whatever is out there now to your report and that they are going to replace the record periodically as they do for all creditors. The final step is to preserve excellent documents to your aspect in order that they are living up to their facet of the deal. In the event that they won't erase the old debts except you could have paid off the 2 new preparations then that is a cheap position for them to take; just get it in writing. The law says 7 years from while you stopped paying they drop. However check with the Banking & Ins. Dept or purchaser security company within the state where u are living. In no way, ever use one of those debt consolidation agencies until u happen to love paying extra money than u owe. The account is a mortgage with the bank but once u default and it's in assortment or charged off, its a entire new ball sport. Good luck.

Answer 4

Some of the opposite recommendation may be very deficient. First off name the customary bank card organizations with the customary card numbers in hand. Ask them if u can paintings with them immediately. If they'll permit it, dicker. Get them to reduce the debt in a million/two and give up the curiosity. Then set the per thirty days cost at a fee u recognise you'll be able to pay each month. Be definite to get the whole lot in writing and the acknowledgment that you simply contacted them and that the brand new deal will exchange some thing is in the market now for your document and that they are going to replace the document periodically as they do for all collectors. The last step is to maintain well files for your facet in order that they reside as much as their facet of the deal. If they may not erase the ancient debts till you've gotten paid off the 2 new preparations then that's a fair role for them to take; simply get it in writing. The legislation says 7 years from whilst you stopped paying they drop. But determine with the Banking & Ins. Dept or Consumer Protection Agency within the state in which u reside. Never, ever use a kind of debt consolidation businesses until u occur to love paying extra money than u owe. The account is a mortgage with the financial institution however as soon as u default and it is in assortment or charged off, its a complete new ball sport. Good good fortune.

Answer 5

This is tough but you can look at it two ways, if you want to improve your credit score asap and can afford to pay, you are going to need to get real familiar with the credit reporting agencies and once you pay off the debt, dispute the item again and again and again until they finally get tired of you and delete, believe it or not this can and does happen, I paid an old debt a few months ago and it was deleted off my credit report two weeks later, it just takes patience.

On the other hand you can just wait 5 years until they come off, because they eventually will be erased but again you must always be aware of your credit reports because they can EASILY forget to erase an old account.

Answer 6

If you can, pay it off. Even if it stays on your account, it will show that while you used to not care about your credit, you've now matured and have made the effort to own up to your past and pay the debt. Pay the one in collections first, but talk to the owner of the charged off account for more info on charge offs. Sometimes they still want the money, and other times they don't care. Most often they don't care, there's nothing to apply it to because the account has been charged off.

Answer 7

countless the different suggestion is amazingly unfavourable. initially call the unique mastercard businesses with the unique card numbers in hand. Ask them if u can paintings with them right away. in the journey that they're going to enable it, dicker. Get them to scale back the debt in a million/2 and quit the interest. Then set the month-to-month price at a fee u understand you will pay each and each month. be confident to get each and every thing in writing and the acknowledgment that you contacted them and that the hot deal will replace even if is for sale now on your record and they are going to replace the record periodically as they do for all lenders. the perfect step is to maintain strong archives on your area so as that they stay as a lot as their area of the deal. in the journey that they received't erase the former costs until eventually you've paid off both new preparations then it really is a life like position for them to take; merely get it in writing. The regulation says 7 years from once you stopped paying they drop. yet verify with the Banking & Ins. Dept or shopper safe practices business enterprise interior the state the position america. under no circumstances, ever use one among those debt consolidation businesses until eventually u ensue to love paying more beneficial money than u owe. The account is a private loan with the monetary company yet once u default and that's in sequence or charged off, its an complete new ball interest. strong success.

Answer 8

I agree with Roger. Before you send any money, negotiate a "pay for delete" effort so that it won't hurt your credit if you pay if off, since they are charge offs and collection accounts and get it in writing. If they decline, you can wait until they fall off with the statue of limitations. (Varies from State to State). The debt should not follow you, even if another collection agency purchases it, because the credit reporting agency, by law, must go by the last payment or last report date of the original creditor. They can hound you for the rest of your life legally, though it should be removed off your credit reports in 7 years.

Answer 9

Well, it can't HURT your score! But it won't help immediately. I used to operate under the assumption that all my old debt would roll off my report and vanish after 7 years if I left it unpaid. When I took a first-time homebuyer's education course at a local low-income non-profit, I found out this assumption is WRONG. The deal is a credit issuer may collect on your debt for 7 years. What they'll do is hold it for a period of years (less than 7) and then sell it to another debt-collection agency, which will then be allowed to collect from you for another 7 years, and so on, and so on.... Theoretically, this means your debt can last the rest of your life! Strong incentive to pay it off (or file bankruptcy- which really will discharge after 7 years)

Call your creditors and negotiate a pay-off. Most will accept 50%-75% of your original debt. I have even gotten some of my creditors down to 35% of my original debt. Just be firm with them about how much you have to offer. Offer them a lump-sum payment of 40% and go from there. That is very tempting for a debt-collector who is receiving a commission from any funds he brings in to his company.

They WILL NOT remove the record of your debts from your credit report until 7 years after being paid off in full, no matter what. However, after 2 years of having no bad debt, most any creditor will consider you for a line of credit again. I can testify- I paid off my debt (by negotiating with lump-sum payments), opened secured-line of credit and paid perfectly for two years. I then qualified for a decent home loan. (I also used non-convential credit to get my mortgage loan i.e.: payment history from the electric provider, phone company, etc.. showing on time payments for two years)

Answer 10

What you need to do is negotiate with your creditor to see if they'd be willing to remove the negative score IF you pay off the loan. If they agree, GET IT IN WRITING! If they do not, then it will drop off after 7 years. Making a partial payment does in fact reset the clock so that it can remain another 7 years (it's 7 years from the last transaction).

By the way, one answerer stated that your creditor can sell off your debt and the clock resets. That is HALF true. They can sell off your debt, but the clock, by law, can not reset unless you make some sort of transaction. The 7 year clock is from the last transaction that you, the creditor, initiated.