Hi. My avg credit score is 640. I have been paying bills on time for the past 3 years. My problem is several years ago, I had a few accounts, which went into collections or were charge offs. I have since paid those bills off, but they are still showing as charge offs. The seven years since last activity as shown will be up in a year or 2. If I have these corrected to show as paid, will that help my credit score, or will it make the 7 year period start over, and actually prolong the lower credit score?
By all means, if they are showing up as CHARGED OFF and you, in fact, paid them off, you should be RUNNING to the CRA's to have them updated to show the current, accurate status. But that status isn't necessarily "good", so much as it is "better" than what it is right now (charged off). Paying an old debt doesn't mean that your past negative (bad) credit history is somehow transformed into positive (good) credit history. It means your delinquent and past due accounts are paid - not unpaid - and now you work toward building NEW, good credit. Your credit "history" is just that - a living "history" of your past financial obligations and a record of how you did (or did not) repay those obligations under the terms you and the lender agreed upon over time. Lenders use that history (and various scoring algorithms referred to as credit risk scores) to make a determination as to the probability that you will repay the credit that you are asking them to extend to you now If you failed to make three mortgage payments a year ago, bringing everything up to date doesn't change the fact that, three years ago, you made three late payments. How could a lender be expected to make a fair determination as to whether or not you are a good credit risk if, after X years of delinquency, all you had to do was pay a few old debts and - *PRESTO* - you appeared as a WONDERFUL risk to them? If negative history became positive history just because it was paid off some day, they wouldn't be able to - which is why ACCURATE negative history remains for a limited period of time. In short, you can't change the (accurately reported) past. The good thing is: as far as credit risk scoring is concerned, the further in the past your negative history is, the less affect it has on your current credit risk (score). Tt is very important (positive) that you paid off the debts (assuming that they were legitimate, accurate debts of yours). A paid debt is better than an unpaid debt, as many lenders will require you to pay off any outstanding unpaid debt before extending you additional credit (e.g., mortgage, auto loan). Be sure that those debts have a paid/satisfied status if, in fact, you paid them. In short: if you paid off the old charge-offs, dispute them as PAID/SATISFIED and see what happenes. Maybe you'll get lucky
