Paid/Settled Collections Score Impact

[Anonymous]

I'm certain that this has been answered already (probably dozens of times), but my lackluster search abilities could not find it.

I recently disposed of two collections; one was paid in full, and the other was a settlement. When the PIF updated on my report, there was zero point change. However, when the settlement hit my reports, my Fico8 dropped about 20 points across the board. The settlement posted 3-4 days after the PIF. I was hoping that it was one of those weird, 'couple day' drops that would rebound quickly, but it's been around 3 weeks now, and they haven't rebounded at all. My FAKO scores also dropped, but by around 40-50 points.

My question is: is this normal, and will it fix itself? It seems absolutely absurd that paying off/settling collections would drop scores. But the FICO gods do seem to be exceptionally schizophrenic 😨

[Anonymous]

No it happens all the time. I have three citibank CO. One still is current, one is gone, one isn't a charge-off anymore with all green OKs lol. When the lender gets rid of the debt and updates the balance to zero, Lag may occur for the debt to reappear. This is not unlike a balance transfer where you can enjoy a split second of both lenders saying zero, it always catches up by the next month. In your case the debt is moving and the derog moves too.

[Anonymous]

The entire thing makes no sense to me. Why would a score be higher with open, unresolved, collections vs closed/paid ones?

[rprisco]

I'm in the same boat, paid firestone charge off last month score went up 40pts, they took all prior derogatory off and marked it as paid after charge off, I also settled the account, no reference to that.

I think settled is scored worse than pif, I have 1 PRA collection I'm scared of paying and 5 remaining charge offs. What I do know, it's less of a score drop if the items are paid when the score is low.

It's crazy I want to pay everything, but if my score drops, what will my creditors think? Will they close accounts or reduce credit lines. That would suck!

Since my scores are coming back despite these baddies, im gonna take it slow and keep try to delete PRA who is now also reporting 1 month terms and they report they are a factoring company. I live in NY, they have to delete the collection and charge offs in five years if settled or paid in full, so I'm cosnider ing waiting until I get close to that 5 yr dofd. I'll create my own pay for delete.

Believe it or not TU deleted my bankruptcy early andy score dropped 20pts, go figure, fico is a mystery.

[rprisco]

1 more thing, if the lines update monthly, that will stop and score will increase on that alone.

[Anonymous]

Yeah, I can't make sense of what impacts FICO. It's crazy  

[Tigremalo2001]

One collection finally removed this week on my profile. Absolutely no change whatsoever. I am perplexed also.

[JGGM]

Are there other collection or charge off accounts reporting? For example you have 5 negative accounts and paid/settled 2 accounts then there are still 3 negative accounts reporting. I did not see a score jump until my  last collection was paid - and they would not delete the account, but as soon as it updated with a $0 balance and paid, my score jumped a lot (I want to say 40 points or so) - but that was my last negative item on my credit report. 

[Anonymous]

I'll chime in too. I was in the same boat. I paid off about 10 collections. That had no positive impact on my score. Then I hired Lexington Law to have them removed. Once removed, that didn't move my score much either, maybe 20 points. It wasn't until I paid off all of my revolving debt that my score jumped massively. Appears to me over the years that each collection destroys your score when it goes on, but is irrelevant if you take care of it and/or have it removed. So yeah, makes no sense.

[Anonymous]

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@JGGM wrote:

Are there other collection or charge off accounts reporting? For example you have 5 negative accounts and paid/settled 2 accounts then there are still 3 negative accounts reporting. I did not see a score jump until my  last collection was paid - and they would not delete the account, but as soon as it updated with a $0 balance and paid, my score jumped a lot (I want to say 40 points or so) - but that was my last negative item on my credit report. 

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I still have one collection reporting. But, it's 3-4 years old, and hasn't changed or updated since I paid the two in question. 

Even though I wouldn't agree with the score not going up after paying them off, I at least could understand and accept it (they're still negative items, after all). But what I can't wrap my head around is decreasing my score because a paid a collection; absolutely mind boggling.