Get Rid of Debt

You’d think paying off delinquent debts would improve your credit score rating, but that is not always true. It does make good sense, and is generally a good practice, but it depends on how old the debt is. If the account has been delinquent for over seven years it should have been removed from your credit report, and you are not obligated to pay it. If you attempt to pay it, you will revive the debt, and restart the seven year period; this could give the lender the opportunity to sue you. Don’t let your good intentions backfire on you, there is a sound strategy you can apply to decimate debt and improve your credit score rating.

First you need to find out what your credit score is. The best way to do so is to get your entitled free copy from This is a website set up by the three main credit reporting bureaus Experian, Equifax, and TransUnion. You are allowed a free copy once a year from each organization. As each of their scores for you may differ, it is best to get a copy from each to get the best overall idea of your credit score rating. Keep in mind that paying off old debts won’t erase the damage done by previous delinquencies to your credit score.

Paying off Delinquent Accounts to Improve Your Credit Score Rating

If a current credit account is merely overdue and is showing as outstanding debt, paying it off will definitely improve your credit score, as any payments you make against it will. You won’t be able to erase any late payments that are showing, but if you return the debt to current status and reduce the total amount you owe on the account, you will raise your credit score.

Paying off a Write-off

 This is the area that can both lower your credit score rating and get you into trouble. When a lender writes off a debt, they don’t expect any further payments on it. If you set up a new plan to pay it off, it will reactivate the debt to current status. This is especially true if the debt is with a collection agency, as they will report it to the credit bureaus as being new debt rather than old. Because new debt has a greater effect on your credit score, even though you are making the effort to pay it off, it will have a negative impact on your score. Even if you pay the debt off entirely, it may still reflect in your report as new debt.

Settlements and How They Affect Your Credit Score Rating

If you manage to settle a debt with a lender for less than the amount owed, depending on how they report it, it could lower your score. Some lenders will report such debt as paid in full, which will positively affect your credit rating. If the report it as settled, because you did not pay the full amount, it will lower your score. You can request the lender to report your final settlement as paid in full during your negotiations with them. You could even try to include it as a term of your settlement.

The best way to improve your credit score rating is of course to pay your debts regularly and on time. Building a credit history of responsibility and reliability will not only benefit you financially, but socially as well. If you do fall behind in your payments though, at least you know whether how you manage it affects your score positively or negatively.

Ethel Wilson is a financial and credit specialist with 12 years experience in the
banking, credit scores, and financial industry. She has advised countless clients on how to improve their credit score rating. She shares the best of her credit score information as a contributor and editor of

Originally posted 2015-03-17 00:51:59.