I know if I pay $2700 on credit card balances, it will raise my score by 54pts. What kind of simulation would it be if I paid off a derogatory mark?
Not much. The derogatory is there whether it’s paid off or not. Over time the negative impact of it will diminish, and when it’s 7 years old it will age off your credit profile entirely.
To elaborate just a little, if you mean pay off a collections account (which is a common type of derogatory mark), it can depend on which model of credit score it is. The VantageScore ignores paid-off credit accounts and so does the FICO 9, but the model in widest use is the FICO 8. So the effect can depend on which credit score is being used.
But one thing is sure: When you pay off that account you are no longer in danger of being sued over it.
Vonnie1214, What state do you live in?
Pennsylvania is wher I live
The Statute of Limitations on Debt in Pennsylvania is 4 years. So if that $2700 debit is over 4 years they can’t sue you. I’m not an expert, but I believe this is true.
Keep in mind that the statute of limitations applies only to whether you can be sued for the debt. The debt will remain on your credit report until paid or charged off.
Building on what Paul and Bev wrote: Collectors frequently file lawsuits on out-of-statute debt. It’s up to the person sued to show up in court to point out the statute of limitations has expired. That assumes the person even knows about the lawsuit, and makes it to the courthouse. There’s an unfortunately a well-known practice called “sewer service,” which means the legally-required notice of the lawsuit is figuratively flushed down the toilet–the person being sued never receives it. Many people only find out about these lawsuits after the judgment shows up on their credit reports.
That is just wrong, and it should be illegal.
Sewer service is illegal, but it seems to be relatively easy to get away with.