Paying your bills on time plays a big role in your credit score, so if you have delinquent debt listed on your report, it's wise to take care of it. The best approach varies depending on the type of delinquent debt that you have on the account. Handle your debts and your credit score will rise.
Talking to Creditors
Sometimes, you just forget to pay a bill -- you may have been on vacation, forgotten to drop the envelope in the mail or just didn't have the money at the time. This will show up on your credit report as being either 30, 60 or more than 90 days overdue. If this only happened a few times, you may be able to work directly with your creditor to resolve this. Call them up and stress your desire to bring your account current. Ask the creditor if he might remove the late payment statement on your account as a good-faith measure. If you've been a good customer, they often will.
Settling Old Debts
If you have a debt that is past due or has gone into collections, it can have a greater negative impact on your credit score. Contact the company that holds your debt and make an agreement to pay the debt off in full. The company may then remove the negative remarks from your credit report, or it may simply mark the debt as "paid in full," which is better than an open debt.
Waiting It Out
All debts have a statute of limitations, which varies by state. Once you go past this date, the company can no longer sue you for the amount that you owe. It will stay on your credit report, but it will eventually drop off -- usually in five to seven years. If you're approaching that time frame, you may be better off financially ignoring the debt and waiting for it to drop off your report.
"Zombie debt" can be a big problem. This is a debt you paid -- usually a delinquent debt that has gone into collections -- that you suddenly get a payment notice for. What has happened is that the original collections company sold the debt to another collections company, even though you paid it off. Keep good records of your debt payments and if a company suddenly comes out of the woodwork demanding that you pay, ask them to detail where the debt comes from and then prove that you paid it off.
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