Should I Pay an Old Collection?
Debt collection accounts are simply bad to have on your credit report no matter how old their age.
Potential creditors question your creditworthiness when they see collection accounts on your credit report. You might find it harder to get approved for new credit cards and loans with collection accounts on your credit report. There is a moral reason to pay off old accounts and there are benefits to paying off old accounts.
You enjoy the benefits of the goods and services that the creditor extended you in advance of payment so you are responsible to pay for those item. So the right thing to do is to repay it if you are liable for the debt. How would you feel if someone withheld money they owed to you like your employer?
The benefits are great:
- Your credit report when updated will show that you have no unpaid collections
- Creditors will be more willing to give you new credit when you have no outstanding obligations
- Creditors will consider you to be more financially trustworthy
- Your debt-to-income ratio decreases, which increases your overall financial health
Salvage what you can. Don’t sacrifice accounts that are in good standing for accounts that are not. Continue making timely payments on all your current accounts.
The Statute of Limitations on debt in the Cayman Island is six years, so before you pay old accounts check to see if six years has passed since you last received correspondence from the creditor or had a transaction on the account.