Sep
25
Credit Report?
Filed Under Credit Report
I have 2 very old credit card accounts, that state charge off on my credit report. Would it be wise of me to pay these in full, or keep them the way they are? I was young and dumb, and spent way more then I could afford. These accounts are more then 5 years old? Please advise me upon what to do…
Right now, I currently and for the past 4 years have had a excelant credit review.
Thank you
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5 Responses to “Credit Report?”
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It always looks better to pay them off. Charge offs are pretty bad looking on your report and they stay on there for at least 7 years minimum.
I wouldn’t worry about them, especially if they are not actively trying to collect. The debt is likely past the statue of limitations (the link below can show you) and negative marks can only stay on your credit report 7 years from the date of delinquency, so they will be coming off soon.
Also keep in mind that accounts with recent activity have the most effect on your score. If you pay these accounts it will make the activity more recent and it could LOWER your score.
It depends. I used to credit counsel people trying to buy houses. Most people I saw wouldn’t pay things off just for the sake of paying them off – their objective was to improve their credit to the point that they could receive financing on good terms. You’re already at the point, it seems, that the account isn’t doing substantial damage to your credit, and it should drop off your report relatively soon (2 years). The credit card companies, on their part, have already written off your debt on their taxes (that’s what a ‘charge off’ is).
If honoring your obligations is a huge deal to you, if it’s going to give a boost to your self image or whatnot, then go ahead and pay them. I can totally respect that, personally.
Another thing you could think about is the opportunity cost of paying these charge-offs. Is there some better way you can use your money, to further goals, build towards future financial responsibility, or, maybe, something more fun that you’d rather do? I’m pretty sure you’ve already thought about that, but just another consideration…
As long as you aren’t planning on buying a house for the next couple years, you may want to just let those age off. While paying them is the moral thing to do, it won’t improve your credit score.
If you do decide to pay them off, you should be able to settle for about 20% of the balance. Lump sum gets the best deals and payment plans have to be short term. Get any agreement in writing and keep it along with your payment proof, forever. Don’t let the collection agency have direct access to your bank account. You can ask for delete for payment, but probably only the collection agency part would be deleted.
You probably should ask for validation before making any offers. You don’t want to pay a collection agency that no longer owns the debt.
Once a creditor has taken a charge off on their tax roles, they usualy sell it to a collection agency. If you have not heard from any, then the origial creditor has closed the account.
the debt is most likely past your states SOL to sue in court, so I would say just let it ride out. They will drop from your report after the 7 1/2 year reporting time. Look on your credit report, it should state when the entry will be removed.
Hope this answers your question.