Scenario - Credit Card bill has not been paid for about a year. (A small amount, about $1700.00)
There's a debate in the family.
One side says pay it all off now (money was received from the sale of a house) and there is a fair bit of money left over.
The other side says let it slide - it will drop off your credit score in a few years, and since you're not planning to buy anything it doesn't matter.
My understanding is that
- this stays on your score for 7 years - thus impacting credit for at least 6 more years. (Not sure when the CC company considered the debt in default.)
- If, for any reason, one needs new credit in the next few years it will be difficult and expensive to get.
Any other reasons to recommend paying off this debt now? All other debts are reasonable and being paid on time. This card (a new one at the time) fell through the cracks during a separation. The people saying to not pay the card point to all these other cards and bills being paid promptly as "proof" that she is a good credit risk.