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Score effects of paying a collection on credit report

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muumike
Regular Contributor

Score effects of paying a collection on credit report

The subject pretty much says it all. Say my FICO is at X with an unpaid collection from about three years ago and I decide to pay it. Will my score drop at all? It is with a third party collector on behalf of CACH.

 

Also, with the collection being unpaid, creditors can see that I haven't paid this right (because it posts a balance on my credit reports)?

Message 1 of 11
10 REPLIES 10
InvincibleSummer3
Established Contributor

Re: Score effects of paying a collection on credit report

There should be no score change - FICO scores them the same, paid or unpaid. Although yes, creditors can see there's an unpaid balance.

Message 2 of 11
blk8
Regular Contributor

Re: Score effects of paying a collection on credit report

Unfortunately, your score will probably be the same. Paid or undpaid collections is scored the same way. The only benefit from a paid collection is during a manual review (like applying for a mortgage loan).

 

Your best bet is to see if they will accept PFD. Good luck!



FICO: EX 662 | EQ 670 | TU 681
Message 3 of 11
txmomma26
Regular Contributor

Re: Score effects of paying a collection on credit report

It seems to depend on how the account reports - I've seen instances where a balance factors into your utilization when the OC reports it, but not necessarily when the CA reports.  I would like to think that a paid collection that continues to report will look good (or at least better) upon a manual review of your report (recon for a CC, mortgage, etc).

Start: (2-26): EQ 602 (Myfico) TU 579 (Credit Karma) EX 634 FAKO
Current: (7-12): EQ 690(myfico) WalmartTU 696 EX 689 (lender 6-3)
1st Goal: 680 across the board - DONE June 2013!
2nd Goal: 725 across the board
Message 4 of 11
NY_Beauty
Regular Contributor

Re: Score effects of paying a collection on credit report

I paid off an old collection and I just got a score report (about an hour ago) that  my score increased 34 points as a result.  650 to 684

Amex Green Amex Gold Delta Rewards Discover IT CU Rewards Visa Closed on my new home 5/2013!

Message 5 of 11
InvincibleSummer3
Established Contributor

Re: Score effects of paying a collection on credit report


@txmomma26 wrote:

It seems to depend on how the account reports - I've seen instances where a balance factors into your utilization when the OC reports it, but not necessarily when the CA reports.  I would like to think that a paid collection that continues to report will look good (or at least better) upon a manual review of your report (recon for a CC, mortgage, etc).


I read someplace (and drat that I can't find it now...) that charge-offs can factor into your utilization, while collections do not. I'll keep looking to see if I can figure out where I picked that up....but you're right, it is better when a creditor does a manual review if they see "paid" on those. Mortgages, particularly.

Message 6 of 11
guiness56
Epic Contributor

Re: Score effects of paying a collection on credit report

Yes it is true that a CO from the OC account will factor into utilization if the CL and the balance are both reporting.  Collections should never factor in but if they are put in the accounts section they can.

Message 7 of 11
InvincibleSummer3
Established Contributor

Re: Score effects of paying a collection on credit report


@guiness56 wrote:

Yes it is true that a CO from the OC account will factor into utilization if the CL and the balance are both reporting.  Collections should never factor in but if they are put in the accounts section they can.


Too funny -  as I wrote my last post, I said out loud "Pretty sure I heard that from Guiness..." and here you are! You're like Mary Poppins, turning up just when you're needed. Thank you.

Message 8 of 11
guiness56
Epic Contributor

Re: Score effects of paying a collection on credit report


@InvincibleSummer3 wrote:

@guiness56 wrote:

Yes it is true that a CO from the OC account will factor into utilization if the CL and the balance are both reporting.  Collections should never factor in but if they are put in the accounts section they can.


Too funny -  as I wrote my last post, I said out loud "Pretty sure I heard that from Guiness..." and here you are! You're like Mary Poppins, turning up just when you're needed. Thank you.


Lol.  You are welcome.

Message 9 of 11
txmomma26
Regular Contributor

Re: Score effects of paying a collection on credit report

Guiness, we do learn from you Smiley Happy
Start: (2-26): EQ 602 (Myfico) TU 579 (Credit Karma) EX 634 FAKO
Current: (7-12): EQ 690(myfico) WalmartTU 696 EX 689 (lender 6-3)
1st Goal: 680 across the board - DONE June 2013!
2nd Goal: 725 across the board
Message 10 of 11
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