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Mark Cappel
UpdatedJun 15, 2007

Can I build my credit score enough by simply paying off my current debt and continuing on a positive course?

I am currently working on getting my way out of debt. I have 2 delinquent items on my credit report, one for $900 and one for $300. These have both been sent to collections. I also have a credit card I am paying off at a rate of $800 a month to have it paid off in 6 months. My credit score is currently a 640. I was wondering how beneficial is it pay of my delinquent debt to credit agencies? Can I build my credit score enough by simply paying off my current debt and continuing on a positive course, or do I have to pay off my credit collectors? Thank You!

Credit scoring is a complicated calculation which considers many factors to produce a numerical representation of the likelihood that you will default on any new credit extended to you. The most important factors used in calculating your credit score are your payment history and your total amount of debt. Combined, these two aspects of your credit history account for 65% of your credit score, so improving either one of these factors should raise your credit score significantly. I always suggest getting out of debt quickly.

Very quickly, if you want a free debt consultation with one of Bill's approved debt help partners, see the Free Debt Consultation page.

Paying off your two delinquent accounts should improve your credit score by reducing the total amount of your debt. In addition, paying off these accounts now will prevent them from continuing to report as delinquent with an outstanding balance. Although your prior delinquencies will continue to appear on your credit reports, no future delinquencies will be reported. Unfortunately, credit scoring is too complicated a calculation for me to tell you how much paying these two accounts off would improve your score.

Even if you do not repay these two delinquent accounts, the passage of time should reduce the negative impact the accounts have on your credit score, it will just take longer than had you paid the accounts off. The question you must consider is how quickly do you need your credit score to improve. If you are planning to buy a home or car in the near future, you should pay off these accounts; with large purchases, even a few extra points on your credit score can save you thousands of dollars in interest payments.

If you honestly owe these debts and can afford to repay them, I certainly encourage you to pay them. But if you cannot afford the debts, or do not believe you owe them, you should know that their impact will lessen over time and that they will fall off your credit report altogether after seven years. To learn more about credit, credit reports, and credit scoring, I encourage you to visit the Credit Solutions and Resources page.

I hope that the information I have provided helps you Find. Learn. Save.