What if I pay off the bad debt?

Question

To build on another question I asked, what would happen to my credit score if I paid in full my bad debts? Would that restart the 7 years?

I currently have a 640-660 credit score and need to increase it in less than two years. I do have 3 negative items which will be at the end of their seven year mark in three months.

Answer 1

You should check the collecting SOL for your state to see were you stand.
Since it has been almost 7 years, there could be a chance you are past the legal collecting SOL and if so, you would not be legally liable to pay.

To answer your question - No, an account cannot legally be re-aged to report for a longer period than it normally would run. It would not matter if you paid or not, it cannot be re-aged

If you pay a negative account without requesting deletion, your scores will drop since the account would be updated to reflect the recent payment status. (updating is not re-aging)

Even though they are negatives, you will probably see a decrease in your scores when they drop off of your reports.
You would be losing history (even though it is negative history)

Your scores should rebound within 6 months or so, or probably even go higher, as long as you keep the positive accounts in good standing.

If it were me and the accounts were due to drop off in 3 months, I'd send a dispute to the CRA's claiming the accounts as obsolete and request removal.
<<< I would NOT suggest doing that if a person is still within the collecting SOL for their state and could not afford to pay the accounts off.>>>

The first thing you should do is check your states collecting SOL.
If you are still within SOL, send the collectors a debt validation letter.
Do not sign your signature to ANY letter you send to a collector, only print your initials or type your name.
Everything you send to a collector should be sent certified mail return receipt.

When you get the signed cert. green card back, send your disputes to the CRA's.

When the collector properly validates the debt, send them a letter requesting to pay a portion of the amount as "payment in full" and that they will agree to remove what they had placed on your reports.
Be absolutely sure you have it writing from them that they consider your payment as payment in full !!!!!!!!!!!!!!

If you are past the collecting SOL, you do have a legal right to send the collector a SOL letter. Which informs them that the debt is no longer legally collectible.

You might click on my profile and click on the last link I have listed. You will be able to find the collecting SOL for your state, sample letter templates for validation, SOL, etc.
Never use a site that requires any payment for information. Especially when there are a few very good sites where you can get the same info, and probably more, for free.

Answer 2

Taking the equity out of your home to pay off old bills isn't wise. First, your going to have a problem getting a bank to cooperate with your plan, mainly because of a poor credit history. If they agree you will be paying bocue interest and that alone should deter you. Why not use the entire amount you were paying for rent and put that on the old debts until they are satisfied. Getting money out of any bank today is like pulling teeth. Good luck!

Answer 3

Paying things are always good. I'll never recommend NOT paying things but they will fall off in a few months.

Without seeing your credit report, it's hard to steer you but pay everything you have on time every month. If you have too much credit - like too many credit cards - pay off what you can and close the ones you don't need. Don't apply for credit all over town.

The things that damage the most is too many inquiries, too much debt, too many credit cards especially if they have high limits. Too many loans. Late payments of course and judgements and collections. Taking out a bunch of credit all at once. Things like that.

Your credit is kind of medium and can be improved pretty easily is my guess. Just keep things going in a positive direction and it will go up. Interest rates you pay are the most affected by a "score". The score itself isn't "the" deciding factor on granting a loan but it can be for pricing that loan.

Answer 4

If the items will soon be on the seven year mark; I suggest not paying them. However, you might have to contact ALL 3 credit bureaus if they do not automatically get removed. This process is actually pretty easy, you just write a short letter disputing the accounts and usually they are removed promptly.

Answer 5

Nothing to be scare. I would in case suggest you to improve your credit score. How to improve my credit score? To find out specifically what you must do to raise your score, you can order your score report from all three national credit bureaus. In addition to your scoreyou still have to pay to find out your credit score, the three-digit number ranging from 300 to 850 that is the key to your borrowing costs.