*Loan,banking and credit>>>credit score

If I start paying off old debts, will my credit score intially get worse before it gets better?

I have often heard that since older accounts don't affect your score as much as newer ones, that paying off old debts that have been neglected will actually initially make your score worse since these bad debts become current due to recent activity. I know that paying these off will obviously help in the long term, but will the score actually get worse before it gets better? FYI...the particular debts are credit card debts that were either charged off or in the hands of collection agencies. Nothing has been paid on them in about 4-5 years (long story how it got to that point), but now I am ready to start catching up.

When an account is "charged off" it's the same as the creditor "cancelling" the debt. In other words they decided they weren't going to get the money from you so they hit you with one last BIG ding (the charge-off status) and then write the debt off.

If you begin making payments to them they will probably NOT report them to the bureas. Why? Creditors pay a fee to list something on a persons report. You're not worth the fee to them anymore since you aren't paying them interest on the accounts AND you'll probably never get a credit card from them again (or at least for a long time).

So by paying them off, you might be soothing your conscience, but once the debt is paid off you're probably going to have to "dispute" it and provide proof of payoff to the credit bureaus to get the "paid" status put on. Whereas if you just wait it out after 7 years the item will drop off your credit - and if it doesn't you can dispute it and have it removed because it's too old to be on your report.

As for credit collection agencies. The creditors routinely "sell" the outstanding debts to these guys for pennies on the dollar. Then the company tries to convince you to pay up.

As long as you have NOT paid the collection agency you are safe from them (if the creditor has put "charged off" on the account on your credit). DO NOT pay them one penny!

Once you pay them you are in effect, opening up a "new debt" and they have the right to ding your credit if you stop paying them. If you don't pay them (and the account has been charged off) they can't do anything to your credit.

If you want more information about how credit scores work and what you can do to fix your credit you can visit my site here:

http://www.1-800badcredit.com/credit-sco... Source(s): Owner of http://www.1-800badcredit.com. Website designed to provide help, advice and solutions to people with bad credit or no credit.

Open them up one at a time. Don't try to deal with all of them at once. Offer a settlement, pay it, and move on to the next.

Do not give them electronic access to our account, do not give them post dated check, and get everything in writing.
I know that if you pay off everything at once, it won't improve the score. But you can make pymnts. But make bigger pymnts to the one that you have the most debt on first and so on and so forth, and that should bring your FICO score up more.
Suze Orman's Book for the Young, Fabulous and Broke.
If they are that old, and you are going to pay them off get it in writing from the companies that they will remove them from your credit report once paid, or else yes they will reset, be marked satisfied and the 7 year clock will start up again.
I believe you can challenge the reset by contacting the credit bureaus. The 7-year period begins on the date your debt went into collection, not on the date of last activity. If you challenge, they will correctly remove it 7 years from origination.

I'm not sure what your score will be in the interim, but I wouldn't let them start the 7 years over again!