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Posted in Paying Your Bills
should i pay off closed accounts?
I have balances on my credit report that have been closed or written off by the creditor. Should I pay start paying these off to raise my credit score? Do they still affect my credit if I don't?
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Question By
adriennecruz

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are they held by a collection agent, or by the original creditor..?

If they are held by a 'collection agent'... then nothing you do or say will turn that negative into a positive... what has happened is the original creditor sold your debt to a collection agent, for pennies on the dollar, and written off the full amount of what you owed as bad debt. period end of story, that file is closed as far as the original creditor is concerned.

Once you get to this point, any money you pay, will go to the 'collection agent' and not the 'original creditor'... All you are doing at this point is feeding them profit.. It will not come off your credit report, and it will not change anything. your account still went to collections and will still show that way in your file.

You could even make matters worse for yourself. Say you defaulted on a charge card, in 2000... it goes to collections and just sits around, untill say 2006, when you decide things have improved enough for you to pay that debt off.. Now almost every debt is subject to the statute of limitations, which in most states is 7 years, which means if the original debt isn't satisfied within 7 years of the date of first delinquency, then the debt is extinguished and is no longer collectable. In that case, it falls off the credit file, and your score goes up.

On the other hand, you have that same debt, go to collections in 2000, just like before but, this time, in 2006, you make contact with the collection agent, who then updates your credit file to show the debt is active, which resets the statute of limitations and the debt clock starts all over again, for ANOTHER 7 years...

So now what you've done, is spend money you didn't need to.. The account may show PAID IN COLLECTIONS, but now the debt clock has been reset so you've got a collections line that will stay on your report untill 2014 possibly even later. As a result, score stagnates or, worse yet goes down, because you have recent collections activity.

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Response by
matman1490

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Closed Accounts

Hello I bought a car coming up on two years , and  my loan was bought out by someone else because they said I've been good at paying my notes. But my question is? Why does it show up on my report as a closed account if I'm paying it?

Response by
mayamaya12

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wow, so im basically screwed!

Response by
Amanda2487

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I say if you can pay them pay them.  You borrowed the money with the promise to pay it back with interest.  Pay them off, cut up the credit cards, don't get anymore and pay CASH for your future purchases.

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Response by
jte1958

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