When it comes to credit, almost none of us are perfect. At one time or another there may be something that was reported to your credit in a derogatory or negative manner. An auto repossession or a charged off credit card account that went unpaid might have been forwarded to a collection agency. It is widely known that banks/creditors can only report negative information for a certain number of years. It may have crossed your mind to ride out those reports and after a few years your credit will perk itself back up. The truth of the matter is that in order for credit scores to improve action needs to be taken.
Even after a creditor is not allowed to report negative information on your credit report after a number of years, why not arrange with them to pay it off? How could that make the report any more negative? Even if you pay back in small amounts something is better than nothing. Why assign yourself to a long sentence of not being able to buy a home or car? Do your best to pay back all debt instead of waiting for time to heal the wound.
Waiting the creditors out and then trying to jump back in the credit game may not be as easy as you might think. Creditors have the option of selling your debt to a collection agency, which may start the clock all over again. Once any negative information is no longer being reported, keep in mind that you need to reestablish your credit. This is your second chance to prove that you are creditworthy and have the ability to manage your debt correctly.
Ultimately it is best not to use imposed timeframes as a crutch. Pay off delinquent accounts as best you can. In the long run you will have better credit and be eligible for more programs that may save you money. Rather than waiting years for the smoke to clear, take action now.