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It's been over 7 years.. How do I pay off old debt without screwing my credit profile?

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onepointatatime
Contributor

It's been over 7 years.. How do I pay off old debt without screwing my credit profile?

Hello everyone, it's been ages since I've been on this forum.  I miss it, truth be told.  So, quick recap of me : I defaulted on a bunch of cards back in 2009, and was in credit jail through 2016.  Since 2017 I've been rebuilding credit and for the most part things have been going well.  Post 2017, I've been gradually paying off old charged off accounts.  I have a *big* one (40K) with a credit union that I'd like to pay off in full.  However I remember reading years ago that if you pay off an account that's dropped off due to the 7-year rule, that you run the risk of being in a *new* 7-year "jail" of sorts because you run the risk of them reporting that the old account has been settled.  So, I called the credit union and asked them if they could put it in writing that if I pay off, that they wouldn't report it.. I asked them if we could keep it a private matter between us.  They put me on hold, talk to legal, and they came back and said words to the effect of "We will not put it in writing that we won't report it on your credit report. However, we won't put it on your credit report."  So to me, this is fishy AF - I mean, if they are serious about not putting it on my credit report, why wouldn't they put it in writing?  I'm so torn between doing the right thing but potentially ruining my credit life for another 7 years, or just abandoning that bank.  Any ideas? Do I need an attorney?



Sep 2013: mid 500s | Sep 2014: myfico: EX 539 | EQ 594 | TU 694 || My Rebuilding Journey
myfico, 12/3/2015: EX 666 | EQ 677 | TU 689 | AAoA : 3y | INQs (12/24) EX 11/13 | EQ 5/9 | TU 4/7
Cards: Chase Sapphire Pref. $6K | BoA Travel Rewards $1.6K | Cap1 QS Rewards $7.5K | Priceline $0.5K | Credit Union $2K | Total (5) Revolving CLs: $17.6K
Goal Score 2015: FICO08 800+
Message 1 of 6
5 REPLIES 5
Remedios
Credit Mentor

Re: It's been over 7 years.. How do I pay off old debt without screwing my credit profile?

Well, they cannot "put it back" even if they wanted to. Negatives must be removed no longer than 7.5 years from DOFD and cannot be re-inserted. When it's done, it's done 

 

I think you're convoluting this with SOL which can be restarted in some instances. 

 

 

Message 2 of 6
creditgnome
Regular Contributor

Re: It's been over 7 years.. How do I pay off old debt without screwing my credit profile?

he is correct. i had a 18k repo wiped off my record last year on all 3 bureaus. no lender or lawyer has ever contacted me about it. only time i ever actually disputed something. i only paid off one bank which was amex and have all whats in my signature from it but my debt is all from 2015-2016. most has dropped off. maybe one day i will pay off the rest if I can even remember what it was. only have one derog left from all the years. hasn't stopped me from getting cards. i am on a roll. last march it was 487 credit score. today it is 660. i never once considered bankruptcy.

current credit score: 652/674
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Business Credit
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Message 3 of 6
OmarGB9
Community Leader
Super Contributor

Re: It's been over 7 years.. How do I pay off old debt without screwing my credit profile?

You can safely take care of the debt as far as credit reporting goes. Legally they can't reinsert it no matter what. The 7 year period has elapsed. Nothing can change that fact.

 

Now, by acknowledging the debt/making a promise to pay/making a full/partial payment, you may restart the *SOL* for legal purposes, depending on state laws, but that aspect has nothing to do with the credit reporting.


Last App: 1/10/2023
Penfed Gold Visa Card

Currently rebuilding as of 04/11/2019.

Starting FICO 8 Scores:




Current FICO 8 scores:


Message 4 of 6
onepointatatime
Contributor

Re: It's been over 7 years.. How do I pay off old debt without screwing my credit profile?

Thank you for the replies.  I'm aware of the SOL potentially restarting, but that's not what I'm concerned about.  I'm talking about something actually showing up on my credit report.  It's been years since I've been into this stuff, so my memory is fuzzy on the details but I recall someone mentioning that if you pay off an old account, that the lender may insert some note on your credit report stating "settled" in reference to your old charged off account, with the date of the settlement.  So even though the bad debt itself technically can't be re-inserted, the fact that you've settled recently may show up. That's what I'm concerned about.  If I understood it correctly at the time, it would seem that this issue would not affect my credit score, but it would definitely be noticed by a human manually reading through my credit report.  I hope this is clearer...?



Sep 2013: mid 500s | Sep 2014: myfico: EX 539 | EQ 594 | TU 694 || My Rebuilding Journey
myfico, 12/3/2015: EX 666 | EQ 677 | TU 689 | AAoA : 3y | INQs (12/24) EX 11/13 | EQ 5/9 | TU 4/7
Cards: Chase Sapphire Pref. $6K | BoA Travel Rewards $1.6K | Cap1 QS Rewards $7.5K | Priceline $0.5K | Credit Union $2K | Total (5) Revolving CLs: $17.6K
Goal Score 2015: FICO08 800+
Message 5 of 6
OmarGB9
Community Leader
Super Contributor

Re: It's been over 7 years.. How do I pay off old debt without screwing my credit profile?


@onepointatatime wrote:

Thank you for the replies.  I'm aware of the SOL potentially restarting, but that's not what I'm concerned about.  I'm talking about something actually showing up on my credit report.  It's been years since I've been into this stuff, so my memory is fuzzy on the details but I recall someone mentioning that if you pay off an old account, that the lender may insert some note on your credit report stating "settled" in reference to your old charged off account, with the date of the settlement.  So even though the bad debt itself technically can't be re-inserted, the fact that you've settled recently may show up. That's what I'm concerned about.  If I understood it correctly at the time, it would seem that this issue would not affect my credit score, but it would definitely be noticed by a human manually reading through my credit report.  I hope this is clearer...?


It can't be reinserted, therefore there'd be nowhere for a "settled" comment to be reported on the account. The only way a human would notice is when undergoing manual review if they pull up internal records (completely separate from your credit reports) if you were to apply for a card with your CU again. But if applying with other lenders, then it'll be as if that negative account never existed (they won't see it on your credit report - settling won't make it reappear in any way, shape, or form).


Last App: 1/10/2023
Penfed Gold Visa Card

Currently rebuilding as of 04/11/2019.

Starting FICO 8 Scores:




Current FICO 8 scores:


Message 6 of 6
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