So, you’ve already learned about why negative information exists on your credit report in the first place. That’s definitely a good start — once you realize that it’s all designed to get you to pay up, you can feel a rush of power at knowing how to really settle the score. If you know that you’re going to pay for these debts anyway, why not make it to your advantage? This means knowing when to settle, when to let the debt go, and when to go ahead and pay full price.

There are going to be two main types of creditors. They’re going to be original creditors, like Visa, MasterCard, Capital One, and others. There are also going to be people like NCO Financial, which are debt collection agencies. If you have to work with a collection agency, you actually might have a little more power than you expect.

You see, once an original creditor has charged off an account, it really doesn’t do them any good if you pay them. In fact, most will not accept your payment anyway — they’ve already pushed you out the door, and now you have to deal with the collection agency. So if you can negotiate with the collection agency, that’s always a good thing. However, you also have to make sure that you haven’t made the mistake of paying for something that is actually time barred. That’s the subject at hand — making sure you know what type of debts you actually need t pay.

If a debt is within the statute of limitations, that’s when you make arrangements. It’s not wise to just wake up a sleeping giant if you can actually help it. The closer a debt is to the statute of limitations, the more you should try to avoid paying for it. It’s not going to do your credit any good to pay these debts, and they’ll fall off your credit report. If they don’t, you can approach the credit bureau yourself and bring attention to the fact that the debts are time barred from being collected. If there’s no reason for the debt to be on your credit report, then it can be removed. If the credit bureau refuses to do this, they’re actually violating a law or two themselves.

The more you can educate yourself about the law, the easier it will be to get help for your bad credit. In fact, the entire industry of debt collection runs off ignorance. If you don’t know any better, you will be over the phone paying for debts that you don’t even have any legal obligation to pay for! And again it doesn’t raise your credit score!

Next up, we’ll cover the other half of time barred debts, including how to figure it all out. Stay tuned!