Paying off accounts in arrears

Kauto5

Hi All,
I have 4 accounts open on my credit file with debt collection firms for old credit card and payday loans that I defaulted between 3-4 years ago. From being under an avalanche of debt I've managed to get myself into the position where I can pay off 2 of the 4 accounts in full at the end of this month. One is with IMFS, one is with Lowell. The other two I have monthly plans in place for. 

Can I ask what impact this could have on my credit rating? I believe that the two accounts I'll pay off will show as settled, but does that still negatively affect my credit rating as they will still have been with debt collection agencies? Do such things stay on my credit report any longer than usual, with them being bad debt related? I hope to see an improvement in my credit file in order to start applying for a mortgage you see. Thanks!

[Deleted User]

Defaulted accounts fall off six years from the default.

Settled accounts look better than non-settled.

Kauto5

Thanks for your reply!

Just to clarify: would the date of the default be the initial date my debt was handed to a debt collection company or would it be the date my account was fully settled? Thanks again!

jasonwatkins

You can go to the equifax website and get a free statutory credit report from them which will show you the exact date you defaulted on each debt.

You have to fill out a lot of information and answer questions on your credit file to confirm your ID but it’s pretty comprehensive and should answer all of your questions.

redux

Kauto5 said:

Thanks for your reply!

Just to clarify: would the date of the default be the initial date my debt was handed to a debt collection company or would it be the date my account was fully settled? Thanks again!

It stays at the original date of the default, same as you can see it now.

You mention settling soon, and seem to say in full, possibly implying lump sums. If the accounts would otherwise have some time to go at the recent rate of payment, it might be worth trying an offer of a proportion of the remainder, rather than the full amount. 

HWBY

Are these "monthly plans" recorded as arrangements to pay? If so, they will will remain on your report six years from the date of the last payment - so you're better off paying them as soon as you can. Ask if you can settle for less than the amount owed immediately, if you're able. Defaults remain for six years from the date it was recorded, not when you paid it off.

I feel your chances of a mortgage are not good.

Kauto5

Thanks again all, greatly appreciate your help. I've now found the default date for each account, all of which are between May 17 and July 18.
I'm not in any formal repayment plan, I've just got direct debits set up with each of the debt management companies for the 4 accounts. I was under the impression that agreeing a settlement for less than the full amount is worse for my credit rating than if I paid them in full? So the status 'closed' would be better than 'part settlement'?
If this is not the case, or if the difference would be negligible in terms of my credit rating, then I will try to make a reasonable settlement offer instead.