Sometimes in when trying to improve your credit paying off old debt is not a good idea.
I have had clients that have in preparing for a home loan start paying off old debt only to find out that there credit scores have dropped 50 to 100 points. Why is this?
Unfortunately when a collection or a charge off account is more than 2 years old (last date of report) and you in an honest effort to improve your credit score, pay these accounts off, it retriggers the reporting by the collection company and your scores will drop as a result. If you have re-established some new credit and have been paying these new accounts on time you are better off to leave the old accounts along.
DO NOT CONTACT THE COLLECTION AGENCIES OR PAY THESE ACCOUNTS THAT ARE MORE THAN 2 YEARS OLD (Reporting date)
If you have collections or charge offs that are still reporting each month to the credit reporting agencies, these accounts can be paid off and have a positive impact on your credit score.
Your new good accounts will have a greater effect on your credit score as long as you keep your balances less than 30% of the credit limit and continue to pay them on time. As far as the old accounts there are better ways to handle these accounts that can have a benefit to your credit score.
The credit reporting agencies and other agencies would have us think otherwise, but the truth is that if these old collections or charge off accounts, do to age, being sold multiply times or specific state licensing requirement of the collection agency are not meet, these accounts can be deleted legally.
That is why it is important to hire a credit repair firm that has the knowledge to handle these types of accounts and can help you eliminate these old collections or charge offs, legally.
Being in the mortgage business for 7+ years and with 80% of my business being referral based it is important for me to employee a company that has the highest standard when dealing with my clients and can do what they say!
VRTech Marketing Group and Third Eye, Inc. has the highest standards and also offers valuable educational materials to the client so they can understand the credit scoring system and maintain there credit scores once the corrections to the credit report have been done.
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