Should I pay off a delinquent account?

Question

I check my credit report every month and this week I saw that an old account I had in 2003 was put on there. It dropped my credit score almost 100 points from 690 to basically 600. I spent the last year working on increasing my score and out the blue this pops up. I was wondering should I pay off the account or just leave it until it drops off my credit report?

Answer 1

It depends on how badly you need a high credit score.

If you are planning on getting a loan within the next two years, you obviously have to do something about it.  If not, you can safely ignore it, as it's most likely beyond the Statute of Limitations.  

Well..don't completely ignore it...they may try to sneak in a default judgment against you.  

Just remember this MAJOR point.  If you pay this debt, all they are required to do is show "paid" on your reports, but all of the negative information will still be here.  The previous answer saying paying it will help your score is a not educated on how the game works.  

Unless the collection agrees IN WRITING to delete this item from your report completely, paying it will not have that great of an effect.  If they refuse to delete it, don't pay.

Therefore, what you would do is send them a negotiation letter.  DO NOT admit to owing this debt just state that in the spirit of trying to clean your credit you would consider paying this debt off (or a portion, such as 50%).  But they must delete this item.  

NO, you do not want them to update your report to show "paid" or "settled".  This does you no good at all.

If they do not respond back, or they reject your offer, begin the dispute process.  Send the credit bureau a certified letter saying this is not your debt, and send the collection agency a "demand to validate" letter.

Hope this helps you out.

Answer 2

I can relate to that. One of my old collection account from 2006 which I paid in 2007 and was not on my credit report just popped up in Febuary 2008. The collection agency added to my credit report even after I paid them in full in January 2007. My FICO score dropped 70 points ! No pleading, goodwill letters and phone calls could resolve the issue. Now I have to live with it. I think you should make a deal for Pay-for-delete and have it removed from your credit report.

Answer 3

Pay it. It will help your score, not over night, but quicker than it would waiting for it to come off your report on its own... that's for sure.

Plus it'll help you in interest rates, insurance rates, etc... credit effects absolutely everything these days!

Answer 4

Duh, you owe the bill pay it so the rest of the world doesn't have to.

(yes rest of the world as YOU not paying your bill people have to make up that cost by raising their prices.....its like your shoplifting....)

Answer 5

How much is the account; I really dont recommend paying it if it is over $500.  You could recover most of that drop by using a tradeline program.  They are very affordable and would get you well on your way to having better credit. My mom used it and not only was able to open other accounts, but her score jumped 51 points. Check out the free evaluation form at www.totaldebtsolutionsllc.com They can help.

Answer 6

Let it drop off. The SOL probably ran out. If you want to increase your credit score,  get a small loan for 24 months and pay it back in 12.

Answer 7

It should drop off in two years. . Most likely it is too old for them to legally collect on it, so Just don't pay it.  You may try to dispute it, if they do not verify within 30 days then it will be dropped off.

Answer 8

If it is 2003, the statute of limitations has probably passed but double check what your state's SOL is. If you are past the SOL, uou are in a good position to negotiate and settle the account. No matter if you settle or dispute, get a pay for delete letter. I cant stress this enough. Paying will not remove negative marks off this account. Pay for delete will. Here is a pay for delete sample letter.

http://www.creditliberty.com/credit-repa...

If the date first reported delinquent is 2003, it will come off in 2010 when this account is 7 years old. One thing you can do is check the date reported delinquent on the account. The date first reported delinquent/charge off is when this 7 year period starts and NOTHING resets that time. So either you can pay/settle for delete or have it removed in 2010. If it is a small amount I would try pay for delete. Try settling for 25% of what you owe and before you pay a dime, get that letter signed by the collections company.