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Paying a collection account

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Anonymous
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Paying a collection account

If I pay a collection account will my credit score go up or stay the same just because it's a collection account that will remain on my report?

Message 1 of 5
4 REPLIES 4
Revelate
Moderator Emeritus

Re: Paying a collection account


@Anonymous wrote:

If I pay a collection account will my credit score go up or stay the same just because it's a collection account that will remain on my report?


Depends on algorithm and collection size, but generally for current credit scoring purposes paying a collection doesn't help; does help for underwriting though.

 

That said check over in the Rebuilding forum, you may be able to negotiate a pay for delete (you pay, they airstrike it, which is in all ways a positive) or other methods for getting the collection off altogether.




        
Message 2 of 5
RobertEG
Legendary Contributor

Re: Paying a collection account

When a debt collector reports an update, either monthly or upon payment of the debt, it informs FICO that the debt remained delinquent up to that date.

That effects the age of the unpaid debt, and permits the collection from aging in impact.

Once paid, further updates cease, and the status is no longer an open, unpaid collection on a delinquent debt.

 

 

 

Message 3 of 5
fltireguy
Valued Contributor

Re: Paying a collection account

For example. I had an old Target CO on my reports. CL $500, with a $1600 balance reporting, updated every single month, and showed the card was maxed and then some. 

Called Target, worked out a settlement for about $533 ( IIRC), paid that amount, and the account updated as settled for less than amount owed. The balance and CL both became 0, and my scores jumped between 20-40 points (depending on the CRA - TU went up 40)..

 

 

NFCU $60.4k/PenFed $22.5k/Commerce $15K/53 $11K/Synovus $14K/BBT $11K/CapOne $12K/DCU $7.5K/BMO $7.5K/Chase $14.5k/Cabelas $10K/ and many many more!
Total CL $398600, plus car and RV loan.
Ooh. Ooh. Getting closer to that $500K mark!
Message 4 of 5
Revelate
Moderator Emeritus

Re: Paying a collection account


@fltireguy wrote:

For example. I had an old Target CO on my reports. CL $500, with a $1600 balance reporting, updated every single month, and showed the card was maxed and then some. 

Called Target, worked out a settlement for about $533 ( IIRC), paid that amount, and the account updated as settled for less than amount owed. The balance and CL both became 0, and my scores jumped between 20-40 points (depending on the CRA - TU went up 40)..

 

 


Not to quibble but a CO is not a collection, it's a charge off and yes those do update monthly and are scored differently than collections.

 




        
Message 5 of 5
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