Posted on: 17th Jun, 2008 07:21 am
Ok guys don’t hate the messenger but, I have to write about this misconception about old debts on credit. One of the “BIGGEST†miss conceptions about credit is to payoff old debts. THIS IS WRONG! I REAPEAT THIS IS WRONG!
Once a debt that has been written off and sent to a collection agency goes beyond “24 months†its negative affect on a credit score is minimal. How the credit bureaus rank the majority of your credit score is on the last 24 months. Once something goes beyond 24 months its negative affect on your credit is not even worth paying attention to! If you do go and negotiate and/or payoff an old debt you move the debt from past 24 months where it has little affect on your credit back to the beginning to month one where it has “TREMENDOUS IMPACT†on you credit! This will cause your credit score to drop at least another 50 points. This is because all of the negative reports from not paying this debt follow it to the front of your credit. In other words its liking poking at a snake it jumps up and bites you! Leave the snake alone and it will not bite you.
The most important thing with most credit scores is that you are “current†on everything within the last 24 months. With regards to old write offs/debt that are past 24 months and are reported to collection agencies forget about them. Tell the collection agency to shove it! Or even better yet ask for the name of the representative who is calling and the name of company the they are represent and number where they are calling from they will not call you again!
There is a lot more explanation as to why and how this happens but I will spare you the boring details.
Hope this helps with this common credit misconception.
Once a debt that has been written off and sent to a collection agency goes beyond “24 months†its negative affect on a credit score is minimal. How the credit bureaus rank the majority of your credit score is on the last 24 months. Once something goes beyond 24 months its negative affect on your credit is not even worth paying attention to! If you do go and negotiate and/or payoff an old debt you move the debt from past 24 months where it has little affect on your credit back to the beginning to month one where it has “TREMENDOUS IMPACT†on you credit! This will cause your credit score to drop at least another 50 points. This is because all of the negative reports from not paying this debt follow it to the front of your credit. In other words its liking poking at a snake it jumps up and bites you! Leave the snake alone and it will not bite you.
The most important thing with most credit scores is that you are “current†on everything within the last 24 months. With regards to old write offs/debt that are past 24 months and are reported to collection agencies forget about them. Tell the collection agency to shove it! Or even better yet ask for the name of the representative who is calling and the name of company the they are represent and number where they are calling from they will not call you again!
There is a lot more explanation as to why and how this happens but I will spare you the boring details.
Hope this helps with this common credit misconception.
cliff, i beg to differ.
collections and charge offs are never going to go away until 7 years have elapsed.
i need to do my borrowing from you; better yet, i think i'll send all my friends your way.
collections and charge offs are never going to go away until 7 years have elapsed.
i need to do my borrowing from you; better yet, i think i'll send all my friends your way.
I'm going to echo these points. It is a mistake to let 'sins' of past haunt you, when it comes to credit 'bumps.' Bury the past, and never dig it up by trying to make it right by paying it off -- it's already been written off by the creditor.
It is a great benefit to the borrowing community as a whole that 'hotlines' of all sorts are surfacing to educate borrowers on their credit stances and their lending options. Try to find the most reputable website, then call the toll-free number to discuss your issue -- concerned, helpful people are waiting to assist you.
Better yet, find a caring mortgage broker who genuinely wants to put you in a better contract. I always approach clients in this manner, and I know the majority of loan officers do the same. If a loan officer is well-trained, he/she always tries to find a benefit in new financing -- otherwise, no new contract should be written.
Also, the CREDIT REPAIR TOOL on this website is a great start! Use it!
It is a great benefit to the borrowing community as a whole that 'hotlines' of all sorts are surfacing to educate borrowers on their credit stances and their lending options. Try to find the most reputable website, then call the toll-free number to discuss your issue -- concerned, helpful people are waiting to assist you.
Better yet, find a caring mortgage broker who genuinely wants to put you in a better contract. I always approach clients in this manner, and I know the majority of loan officers do the same. If a loan officer is well-trained, he/she always tries to find a benefit in new financing -- otherwise, no new contract should be written.
Also, the CREDIT REPAIR TOOL on this website is a great start! Use it!
There are times when it is worth paying off charge offs. However, this is only after the strategy and goal of the client has been established. To many times people just start doing things to improve their credit that actually ends up lowering their score.
I cannot agree with you on this one.
Everyone's credit report information is different and these accounts will affect their scores in different ways. There is no one panachea for everything.
I had accounts that were charged off and in collections and I left them alone in 2006. My score never budged. I started paying them off in 2/2008 and my score has improved 80 points on some reports. Why? The charge-offs and collections were all credit cards.
Why is that important? Your credit card balances have a big impact on your score along with any late payments, missed payments etc. You pay down all your overall credit card debt and your score improves. I am not saying that credit cards are the end all and be all of your score, there are many factors that can contribute.
My fiance has no credit card debt but five repossessions. His scores are 584 TransUnion, 550 Equifax and 619 Experian now, and rising as each month goes by and his credit accounts age, with about $45k in debt. Why? He manages his credit cards and has not had a missed or late payment posted since 2006.
So, I can't agree with not paying your charged-off accounts. You would have to look at each person's individual credit report to see if it would be a good idea or not. Then there are the credit reporting and debt collection statute of limitations to consider, along with the amount of the debt and the possibility of a lawsuit.
Everyone's credit report information is different and these accounts will affect their scores in different ways. There is no one panachea for everything.
I had accounts that were charged off and in collections and I left them alone in 2006. My score never budged. I started paying them off in 2/2008 and my score has improved 80 points on some reports. Why? The charge-offs and collections were all credit cards.
Why is that important? Your credit card balances have a big impact on your score along with any late payments, missed payments etc. You pay down all your overall credit card debt and your score improves. I am not saying that credit cards are the end all and be all of your score, there are many factors that can contribute.
My fiance has no credit card debt but five repossessions. His scores are 584 TransUnion, 550 Equifax and 619 Experian now, and rising as each month goes by and his credit accounts age, with about $45k in debt. Why? He manages his credit cards and has not had a missed or late payment posted since 2006.
So, I can't agree with not paying your charged-off accounts. You would have to look at each person's individual credit report to see if it would be a good idea or not. Then there are the credit reporting and debt collection statute of limitations to consider, along with the amount of the debt and the possibility of a lawsuit.
