Falling behind on a bill can be serious business, particularly if your bill is sent to a collection agency. A bill that is sent to collections, or is \”charged off\”, can make it very difficult to borrow money for essentials such as a home or car. However, there are constructive ways to approach a charge off than can (over time) reestablish your credibility as a borrower.

A charge off remains on a credit report for seven years, however after that time federal law requires that credit reporting agencies (Experian, TransUnion, and Equifax) must remove the offending bill from your credit report. The Fair Credit Reporting Act (FCRA) protects consumers, creditors, and credit reporting agencies

When it comes to dealing will bill collectors, it is important to remember that each state has a different statute of limitations when it comes to how long an agency can take serious legal action to collect your bill. Typically this time period is not more than five years, however you can check with your states Office of the State Attorney General. After this statute of limitations has expired, a collection agency can no longer sue you for the debt you owe.

Certainly, these first two options point to steps you can take if you are unable to pay your bill. This begs the question, when is it a good idea to pay what you owe? Becky House of American Financial Solutions says that there is a lot to think about when it comes to paying old debts.

The first thing to consider is that paying old debts, even after they have been written off, can bolster your credit score. Paying these old bills can increase your credibility with lenders, making it easier for you to borrow money should you need to. However, it is important to note that paying on old debts will not erase the old debt from your credit report or necessarily boost your score. Luckily, Rod Griffin who is the Director of Public Education with Experian reminds us that your actual credit score is not everything. Doing everything you can to bolster your credibility with lenders is critical as they are looking for a complete financial picture of who you are.

Even if you\’re not thinking of applying for a loan, improving your credit score can help you in many other ways. Professional property management companies look at credit scores when considering whether or not they want to lease to you. After all, a lease is just a different type of loan. There are also some employers who consider credit score when going through the screening process as a way to determine how reliable you will be as an employee.

There are certainly options when it comes to paying off charged off debts. Speaking with a credit repair counselor will give you a better idea of if it is in your best interest to pay off the debt, settle with a collection company for a lesser amount, or just ignore it entirely.

Are you looking for more information regarding credit score? Visit http://www.thecreditjourney.com today!

Are you looking for more information regarding credit score? Visit http://www.thecreditjourney.com today!

Author Bio: Are you looking for more information regarding credit score? Visit http://www.thecreditjourney.com today!

Category: Finances
Keywords: credit score,credit report,credit reporting