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I was reading this article at Bankrate and thought it was good information to know. The question was about a $6000 debt.
How does the update of your payment get on your credit report? The creditors who report your credit history to the bureaus have to report that you paid. And you do want your credit report to reflect that the account was paid. Interested parties reviewing your credit report, especially potential lenders, will want to see that you did pay, even if it was late and/or for less than the total amount due.
However, the fact you paid will not have an immediate positive effect on your credit score. The negative listings are accurate and will remain on your credit report for seven years, starting with the delinquency that led to your charge-off. Remember, credit scores are developed by looking back at your credit history. Yours will be tarnished until you add more positive information over time. We all make mistakes, and this one will have less and less of a negative effect on your credit as time passes.
The elves at FICO say your score will drop 45 to 65 points if you had a credit score of 680 before the settled account and 105 to 160 points if your score was 780. The good news is it should only take between two and three years for your credit score to show recovery. If, of course, you don't have any other new negative listings on your credit report.
http://www.bankrate.com/finance/debt/charge-off-accounts-sting-credit-report.aspx
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And that's why you never should let it get that far. When you can see you're heading for trouble eg losing your job soon, it's wise to contact your cc provider or anyone you would owe payments to before you fall behind, not after. Ignoring it doesn't make it go away either. They'll work with you and be more flexible if you go to them quickly.
Very true! It also saves them the time and money it costs to pursue it through all the steps if the person agrees to a payment plan sooner rather than later.
And that's why you never should let it get that far. When you can see you're heading for trouble eg losing your job soon, it's wise to contact your cc provider or anyone you would owe payments to before you fall behind, not after. Ignoring it doesn't make it go away either. They'll work with you and be more flexible if you go to them quickly.
The best way for a person to have happy thoughts is to count his blessings and not his cash. ~Author Unknown