I dont understand the logic behind advising that a paid collection is worse than an unpaid collection.
The collection itself is a major derog in your credit scoring. FICO scores the occurance of the collection, and paying or not paying is not a credit scoring issue. They are scored the same. Removal of the affect of the collection on your credit score is achieved only by deletion of the collection itself, such as by way of a PFD agreement with the debt collector. So paying wont harm your credit score.
Separate from the issue of FICO scoring is manual review of your CR. A potential or existing creditor who reviews your CR will certainly look unfavorably upon your failure to pay prior debt. Showing that a debt, while having gone to collection, was nonetheless paid, is a positive, not a negative. So one factor is how long is the collection scheduled to remain in your CR before its CR exclusion date has arrived (i.e., 7 years plus 180 days from the DOFD on the OC account)? Until it is excluded from your CR, its status as unpaid will be included in any CR pulled by others.
And of course, unpaid amounts under collection, or for that matter in any status, are subject to legal action for their recovery. To simply ignore a debt based only on credit scoring implications is not the entire picture. The SOL status is also important, as it has implications should any legal action arise. If expiration of SOL has not occured, or has substantial period remaining, the risk of legal action remains.
When you read advice not to pay delinquent debt, what are the asserted advantages (other than simply keeping the $$ in your pocket)?
