10 Myths About Your Credit Report – Part 1: When You Pay Or Settle A Debt It Comes Off Your Credit Report
By Jay Fleischman, New York Bankruptcy Lawyer on Oct 7, 2007 in General Bankruptcy Information
When you pay off an old collection account your creditors will usually update the trade line to show the debt as paid, but with a current date. This means that if the account was past due and charged off, now it is updated and showing as paid after having been charged off. Most people do not realize that a current negative item will lower your credit score more than an old one. In addition, always watch out for old debts that are nearing the end of the reporting cycle. If you have a charged off debt that has been sitting there for five years then it may make better sense to let it fall off your report entirely rather than pay it and effectively re-start the credit reporting cycle.
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