Does paying off past-due accounts neutralize their negative status?

You would think that would be true, but again, the credit reporting system just doesn't work that way. When you pay an old debt, the negative credit listing doesn't disappear. The most ironic thing is that a paid negative listing is not usually any better than an unpaid negative listing. It is not always true, but in most cases, you won't get much further by paying the old debt.

Negative credit is allowed to stay on the credit report for a maximum of seven years, except for bankruptcy, which may remain on the credit report for ten years. This seven-year clock begins ticking on "the date of last activity"; in other words, when the last action took place on the account. By paying an outstanding, delinquent debt you will change the account status to "paid collection," "paid was late," or "paid was charged off" - which will still stand out as a very negative listing.

Furthermore, you will create a new date of last activity on the day you settle the account. The seven-year clock will reset and begin all over again. When you have outstanding debt, it is almost always prudent to seek professional help so that you may settle your debts without further damaging your credit. We have additional services we can recommend to settle this debt that may be appropriate for your situation and save you a lot of money in the process. Be sure to contact one of our Credit Repair Specialists for assistance.

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