To some lenders it doesn't matter when they were paid or even if they are paid. When I went through the process most of my debts were paid off within a few months. It was never questioned. Good luck.
Starting Score: 529
Take care of them sooner rather than later if at all possible. A collection company will only keep your account for so long before they give up on it and find another collection company to sell it to. This can result in multiple derogtaory comments on your report, that just adds a little more of a headache once you get it paid off. If you pay one off, the previous collection items will show transferred/sold/$0; But you get to deal with taking time to get it removed after you get the account paid with another collector. I'm not saying this WILL happen, but it's what I had to deal with on a few accounts.
I had a few collection items on my credit that I was too scared to deal with, as each time it came up I just didn't have the money to pay them. So they just sat there for a few years, one collection company would sell the account to another, so new letters/calls/etc. Finally I got to a point where I just decided to talk to a collection caller and just wanted to "deal" with it. I had 4 collections, called and told them I wanted to pay the balances in full and take care of them, but couldn't just give them a bunch of money. They all pretty much gave payment schedules wanting like 2-3 payments to pay them, which was still more than I could do. I told the paym no, I can pay $xx.xx a month and would like to setup a payment schedule to have the account paid in full in xx months. Two of them said alright immediately, the other two said they couldn't/wouldn't do the time frame I wanted. But, I just told them I'd have to let the account ride as is then until a year from the call. They both pretty much agreed to my time frame rather easily. Anyways, I setup payment plans for many months with payments that I decided were good for me prior to calling. If you call them with a plan to pay the balance in full, they will work with you, as they only make money if you decide to give it to them.
Be Nice! You'll read thousands of post on this forum an others about how horrible collection callers can be, etc. I'm not saying there aren't issues with that. But, as with any customer service contact, they will react how you are with them. Be courteous in your contacts. Refrain from demanding items or "well, I'm just not going to pay if you don't....". You gotta remember they're job kinda sucks, they have people yell at them many times a day, and become numb to it. From my experiences as a store manager, many people that complain about my staff usually have fuzzy memories as to how they acted with the staff. Most of the time the customer was anything but nice, but they will go on about how they over exerted themselves to be polite while they were yelling at a 17yr old for something they had no control over. Just an example.
I've been addressing my credit since March 2013, and you can see in my signature below it's improving, but your credit will not bump overnight after you take care of your collections. It takes another 6months or more before you see good improvements in score. In summary, getting items addressed earlier rather than later in regards to your credit is always better.
The paid or not paid does affect your interest rates greatly and your score. So, it kinda does matter to your pocket book later on.
@FixMyCredit1992 wrote:I cannot afford to pay the two collection accounts currently on my CR. One is for $1,035, the other for $366. I'm moving and cannot spend that kind of money.
Thing is, if I leave them on there for 1-2 years, and THEN pay them, will it hurt down the road? Will a mortage lender look at my CR report and see they got paid, but 3 years from when they CO, and go "well we can't give you a loan because you took so long to pay them off".
I know scores are counted the same for a paid vs unpaid debt, but how badly are these two derogs hurting my score?
The lender isn't likely going to care if it took you three months or three years to pay off those debts. The only things they're going to care about are that the debts went to collections and that you paid them. Have you considered offering a settlement? Many CA's will settle a debt for 50% of face value or less. Also keep in mind that you can ask for a PFD, although I've found this usually requires that you PIF. The longer you leave those debts open, the more the balances will increase.
@munkyBeatz wrote:The paid or not paid does affect your interest rates greatly and your score. So, it kinda does matter to your pocket book later on.
This is incorrect. A paid collection account is scored the same as an unpaid one. They are both considered major derogs.