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Addressing Past Due Accounts

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The biggest factor in your credit score is your payment history, making up 35%. This means that if you have multiple past due accounts, your credit score will significantly suffer.


So, after taking care of any errors on your credit report, you’ll want to start working on past due accounts. The objective is to get all your accounts paid and current.


When one of your accounts is more than 180 days past due, it’s considered a charge-off. Charge-offs are really bad for your credit score and you want to do whatever you can to keep them from going on your credit report. With this in mind, work on paying off accounts that are past due and in danger of being charged off.


The good news is that your creditor may be willing to negotiate with you. Tell them that you’re very eager to avoid having the account charged off. They may be willing to dismiss some of the late fees or let you pay the balance over several payments instead of all at once.


If you have accounts that have been charged off, you’re still responsible to pay them. If you don’t deal with charged off accounts, you’re going to find it really difficult to secure new credit or a loan.


Once your charged off account is fully paid, your credit report will show a $0 balance for that account. However, it will still show up on your credit report for seven years. It is possible that a creditor may be willing to settle a charge-off for less than the full amount. You’ll need to negotiate with the creditor to determine if this is possible.


In addition to past due and charged off balances, you must handle accounts that have been sent to collections. With these accounts, you can follow the same steps as with charged off accounts by paying off the balance or settling with the creditor for a lesser balance.


Like with charge-offs, your credit report will reflect these balances for seven years.

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