There is nothing more irritating than increasing your credit score and then seeing it drop significantly months later. When this happens, you review your report thoroughly to see if there are any new negative items reporting, only to find that a rather old item has all of a sudden started to report again!
The good thing is that whether they continue to update it or not; the bureaus will still delete it based on the Date of First Delinquency (the date you became late on the account and never brought it current again) no matter how regularly the creditor reports it on your credit; similarly, your state's statute of limitations will remain unaffected as well.
In this client's case, the debt will be deleted in June of 2015; so we're going to let them sit tight. The state's statute of limitations on this debt has passed so they are banking on this drop prompting my client to call them up and make payment arrangements on a debt that is time-barred; slick right? But, it works all the time to those possessing little credit and collection knowledge. But now you know!
If your debt still has a few years left of reporting time; both federal and state; you have a few options:
1. Dispute it
2. Pay them (if collection agency, Validate First!)
3. Settle
4. Wait it out; they usually stop reporting anyway as the debt gets older
5. Keep your other/newer credit items squeaky clean – paying on time, keeping all balances super low. Although negative items factor into 35% of your score (Payment History); 65% of your score (Payment History/Amount Owed) is based on how well you manage the credit you currently have.
Hope this helps!
If you’d like to learn how to apply everything I’ve detailed here, check out my Credit on Fire Academy! My members are doing more than increasing their credit scores; they are TRANSFORMING them!
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