If you have an outstanding bill and you think the creditors will write it off, be careful. You may be thinking, "This credit card bill is six years old!" Well, that doesn't matter; there is no Statute of Limitations when it comes to credit card bills. What can you do? If you've found a bill that you haven't paid in years, here are a few suggestions.

If a lender doesn't receive payment within six months, it will typically take several actions. They will not only report it to the credit bureaus, they may also turn it over to a collection agency. They could also 'charge-off' the outstanding amount. While the term may sound as if the company will forget that the bill is due, in reality it means that (1) it will appear on your credit report as a charge-off, and (2) it will be listed on your report as "in collection". That thump you just heard is your FICO score taking a tumble down toward the bottom of the ladder.

Now, there is some good news. If you pay off a bill that is more than six years old, and the creditor has rendered the amount as charged-off, there may be ample time to ask the creditor to note that the balance has been paid, thus leaving you with a zero balance on the credit report. p>On the downside, however, if a collection agency has taken over the payment of the bill and you have paid the bill to the collection agency, it will have an adverse affect on your FICO score. It should be noted here that with regard to your credit score, it's the report by the creditor that carries the most weight and not that of the collection agency.

Here's an example of what could happen if you don't pay off that six-year-old bill. Let's say you want to buy a new car. Your credit report is checked and it indicates that there's an open collection. The auto dealer will require you to pay off the debt before you can proceed with the car loan. But, since you haven't paid the bill for six years, your credit report will show a negative mark for that particular bill. This mark can remain on your report for seven years from the date of last activity on the account. It's a catch-22 situation.

Now there are some who theorize that not paying the bill would be the most beneficial at this point. Others suggest that having a bad mark on your report for seven years is acceptable, and once the mark has been removed, your credit score may increase. There is no guarantee of this, however. An opposing opinion is that FICO scores tend to drop if a bill has never been paid. Of course, how the FICO score is determined can make the difference in the point spread.

The bottom line is to ensure that your bills are paid on time. If one bill gets away from you, make sure that you pay it as soon as you possibly can, or contact the creditor to make arrangements for payment so that they won't forward a negative entry to the credit bureaus. If you work with the creditors, most will be more than happy to work with you.

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