Credit Record Vs. Credit Score

• Your credit record is an ongoing record of all reported credit transactions going back at least seven years. Your credit score is a numerical figure between 300 and 850 calculated by credit bureaus that reflects the state of your credit record. A FICO credit score is composed of 35 percent payment history, 30 percent amount owed, 15 percent credit history, 10 percent new credit, and 10 percent types of credit.
  
  

Paying off Delinquent Accounts

• Because of the way a credit score is calculated, specifying an exact numerical amount that a credit score will improve if you pay off one or even all delinquent accounts that are listed is impossible. Each individual's situation is unique, and the short and long-term numerical change in a credit score from paying off delinquent accounts will vary relatively dramatically based on how large the debt was, if that was your only delinquent account, and your current credit score. The general rule is the lower your current credit score, the more positive effect you get from paying off delinquent debts. However, the opposite also holds true. If you have a high credit score, paying off your single delinquency will protect your good score but not increase it much.
  
  

Credit Score Increases for Paying Deliquent Accounts

• In most cases, you can expect that completely paying off a delinquent account will add 30 to 50 points to your credit score within three months -- perhaps even more if it was a large delinquent debt or your credit score was very low. If you cannot pay off a delinquent account, just bringing it back to regular payment status and making payments on time for six months can result in a 20 to 30 point increase in your credit score.
  
  

Example

• The Consumer Federation of America gives an example of Don and Doris whose excellent credit score of 720 fell all the way to 645 within a few months because of an overlooked and eventually delinquent bill. The couple managed to get their credit score back up to 665 within just a few weeks by paying the delinquent amounts, contacting the bank to explain the error (traveling) and asking that the credit bureaus be notified of inadvertent error and that the account was current. Their credit score returned to 695 within six months of continuing to pay all bills on time.