I'm trying to repair horrible credit from the past several years. I'm now self-employed and making 2x what I was making in the past (and the business has been growing for the past 3 years). I want to buy a house someday down the road and was hoping on doing this next year, but the more I look at my credit, the more I think it might not be for a couple more years. Here's my situation - I have some bad debt/collection records for a few previous credit cards totally about $4000. These are scheduled to come off my report in 2009. Personally, I would rather pay these off - but I'm afraid, from what I've read, that this will only restart the date of last activity and they will be on my report another 7 years. Because the debts were considered "revolving credit", the FICO Score Simulator tells me that if I pay off my revolving debt (these very old collection accounts), that my simulated score will improve by 40-80 points. This doesn't seem right to me, as these are collection accounts and soon to fall off the report. I also have to wonder if the dates of last activity are correct, as these items are not on my Transunion report anymore. Does anyone know if this will in fact help or hurt me to pay off these debts? I'd much rather pay, but not if it is going to restart the date of last activity and screw me over another 7 years. It's a shame that paying off a debt will only hurt you.
