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Credit Repair Tips

Settling a Past Due Debt? Here’s How to Make Sure it Helps Your Credit Score

According to the folks at Fair Isaac, one of the biggest factors that affects your credit score is your history of paying debts.  If you have one or more debts that are in “collections”, your credit score has probably taken a big hit.

So it makes sense that if you were to pay off the bad debt, that your credit score would rise. 

Unfortunately, that is not always the case.  Here’s why.  If you negotiate with a creditor to pay off an old debt, the creditor will happily take your money and list the debt as paid off on their books.  However, they will not necessarily ask the credit bureaus to delete the debt from your credit history.  In fact, they most likely will NOT ask for the debt to be deleted.  It will continue to show up as an “uncollected” item on your reports for years, continuing to hurt your credit score.

So what can you do?

Here’s one (important!) tip that you can use when settling old debts—as a condition for paying the debt off, demand that the creditor ask the credit bureaus to remove or delete the account from your credit reports.  That’s right, tell your creditor that you will pay off the old debt, but only if the fact of the old debt is eliminated from your credit history.

This simple tip will usually cause your credit score to skyrocket.