Debt collections and charge-offs may not affect your credit score as much as time passes– they stay on your credit report for seven years– but creditors still refer to it when they evaluate your application for a new loan. Many lenders will not grant you mortgage or car loans unless you take care of your past obligations. Even if an account is charged-off, this does not mean that the creditor has already canceled your debt. You still have to pay for it and they will continue to collect and even sue you for nonpayment.
One way to have collections and charge-offs removed from your credit report is to negotiate with the original creditor (not the debt collection agency who is now collecting from you) to have the item erased in exchange for payment. Of course, bargaining to “pay for delete” only works if you have the money to honor the agreement which you should have in writing. Do not make the payment unless you already have a hard copy of the agreement. After you have fulfilled your end of the bargain, check your credit report to see if the item has already been removed from your record. If not, dispute it and show the signed agreement and your proof of payment.
This program is ideal for anyone interested in real and lasting credit improvement.
If you can’t get collections and charge-offs removed, you can simply wait for the statute of limitations to take effect. This happens seven years from the time the collection or charge-off was first reported. This is especially important since some mistakenly think that if the debt was first reported in 2000 and you finished paying it in 2003, it will stay in your report until 2010 (2003 + 7 years= 2010). Since the first reporting was in 2000, the collections or charge-offs will only stay in your credit report until 2007.
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