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Paying Off Debts Does Not Make Them Disappear

Written by bad credit repair.

There seems to be a common misconception out there by consumers that once you pay off a debt, it is magically erased from your credit report.  This is incorrect.  When you pay off a debt, tax lien, judgment, revolving credit line, loan, or any other type of report on your credit, it does not disappear.  What you have done is satisfied your obligations to the creditor; therefore they will report to the credit agencies that the debt was “satisfied”.  Even after the debt has been satisfied, it will typically still be reported to the credit reporting agency for quite some time. 

Though this news gets consumers down, it should be looked at as a good thing.  Why would you want information that is positive to be removed from your credit report?  Paid off car loans, paid of credit cards, and even paid off judgments are considered a good thing.  If it is paid off, you want that positive report on your credit report.  By showing these satisfied accounts you are proving to potential creditors that you can meet your obligations.   Even when you are paying off collections accounts, once they show that they were satisfied it shows a potential lender that you are working to satisfy any obligations in your name.  Any outstanding negative items on your credit report will then be offset by this positive information that has been placed on your report as well.

This is where disputing good accounts in your name with a credit reporting agency can actually hinder your credit repair process.  If you are trying to increase your credit score, never dispute paid off items with the credit reporting agency.  A long history of “paid” accounts are what show lenders you pay your debts.  Just remember that all information on your credit report will drop off after it has reached the seven year mark.  This will include negative debts and collections, but when it comes to a bankruptcy, this can stay on your credit for over ten years.

With that said, paid off items on your credit report are a good thing.  No matter what they were, they are paid.  Potential creditors and lenders want to see a trend of “paid” items, which is the entire purpose of credit history.


A full-time home-based Marketing Manager by day, 24/7 Mom, and a Blogger at any time. I’m 42 and proud. Mom of Derelle & Erchelle, sharing my adventures as I walk through motherhood and having to do most things on my own while my Indian national husband works miles away from home.