College grad’s credit score needs help

Dear Debt Adviser,
I just finished college and incurred some debt during my six years at school. Regrettably, I ignored the payments (for about four years) and let them default. I am currently paying off a collection agency for one of the debts. My question is this: Once I get my credit cleared up, how long should I expect my credit score to be low? I will be contacting the credit bureaus to remove the account off my credit report once it is paid off. Thanks in advance.
— Derrick

Dear Derrick,
Fortunately for you and others who have past credit mistakes, the credit scoring people at FICO and VantageScore think that if you can clean up your act for two to three years, your score should show considerable improvement.

Debt Adviser’s Quick Tips
  • Pay off old debts.
  • Keep new charges low.
  • Pay everything as agreed.

But, I’m afraid I will have to burst your bubble about getting the paid collection items off your credit report once they are paid. The credit bureaus must abide by the Fair Credit Reporting Act, which states how long negative items will remain on your report. The collection item you are paying off along with most of your other delinquencies will be on your credit report for seven years from the date your delinquency commenced.

Your credit will improve with time, but not overnight. The accurate negative information associated with your accounts cannot be removed by the bureaus, or any company that may promise to do so for a fee, once you have paid them off. So, just paying what you owe will not improve your credit immediately.

Before you ask, “Then why should I bother to pay them?” let me point out what happens if you don’t. First, you will continue to be contacted by the collectors, and the collection process will likely escalate — possibly ending with you being sued in court. Some of your debts may be past the statute of limitations to collect using the courts. You can check your state’s statute here. Even if some debts are past the statute of limitations, however, collectors may continue contacting you. It just means they can no longer successfully sue you in court (as long as you show up every time you have a court date and prove that the debt is too old).

If that’s not enough, at some point in the next few years you will probably want to borrow money, open a new credit line, get a job, rent an apartment or get insurance for your wheels or pad. This will be before the negative accounts rotate off your credit report. So, remember that while you have some damage that can’t be fixed, the people who will be making decisions based on your credit bureau data don’t like to see accounts that were never paid. Paid late, even extremely late, is often much better in the eyes of someone considering doing business with you than an unpaid, ignored or dodged debt.

I am glad that you are in a position mentally and financially to pay off your debt and that you are doing so. The best way to improve your credit score is to continue to add positive information to your credit reports. Pay off all your overdue accounts as quickly as possible. Then continue to pay all your current obligations on time, and on the agreed-to terms. Also, watch your credit limits on revolving accounts. You will be scored lower for using a high percentage of your available credit on revolving accounts or credit lines. My suggestion is to keep your credit usage to 25 percent of your limits.

I recommend everyone check their credit reports with all three major bureaus every year, for free, at For you, it will be helpful to be sure that the accounts you are paying off are listed correctly and that no inaccurate information is added that could bring down your credit score. Give it some time and continue to monitor and manage your credit well, and your score will be in much better shape in less time than it took you to get through college.

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