Q: Why do I have already paid off debt showing on my credit report? My $1,100 debt with Target Visa was sold to a collection agency. I settled with them for $500 and got Paid In Full letter sitting in my drawer. That was in May. Yesterday I had a chance to look at my credit report, neither a free copy nor the one you get from myFICO and such. That was the credit report lenders get with Equifax and TransUnion scores. To my dismay, Target still shows full $1,100 balance. What can I do to remove it?

A: Pretty much nothing. It will be sitting on the credit report for 7 years. I am almost positive that what you saw was not the paid off debt, but the charged off one. What happened, your collection agency bought this debt from Target for something like $150 to $200. May be for less. Target Visa then declared this debt as a Charge Off. You did not paid off the original debt but only a portion of charged off debt, once you settled with the collection agency, which is certainly showing $0 balance under its record, because you paid it exactly per your agreement with the collection agency, as the letter you mentioned from them attests.

But Target has a full right to show the whole amount you defaulted on with Visa in the Balance column of your credit report under its now charged off account. It should be shown as $0 in Past Due column because the debt was sold. The perfect example of not so paid off debt can be seen on Derogatory Accounts section of credit report. Look at Fleet and People Energy records. For more information you can also read Charged off debts and credit report.

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