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Established Member
Posts: 43
Registered: ‎12-03-2007
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Will paying off collections increase your credit score?  Should you go ahead and pay off collections before applying for a mortgage loan or should you go ahead and apply for a loan and let the loan officer advise you as to what should be paid off?
Super Contributor
Posts: 8,198
Registered: ‎03-25-2007
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Re: Collections

There are experts around, but as I understand it paying off a collection will not improve your score (go figure), but most Mortgage lenders will insist they are paid off before giving you a loan.
Someone else will chime in soon, I hope
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Senior Contributor
Posts: 3,432
Registered: ‎08-27-2007
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Re: Collections

depending  on how old they are, paying them could actually lower your score. it's a tricky scenario (as i understand it).
1. fico could care paid or unpaid, if it's recently reported you take a score hit.
2. if you had no activity (reporting wise) and pay it, fico dings you for recent collection info
3. you can try a pfd, and if sucessfull fico acts like it never happened
4. if you try pfd, fail and ca gives up and sells the debt you take a deeper score hit.
5. don't pay, ca doesn't bother to sell fico stops caring after 7 years and it ages off
trying to figure this system out is like hearding cats!
Super Contributor
Posts: 6,211
Registered: ‎09-18-2007
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Re: Collections

Before paying off the collection make sure you get a letter from them that they will remove it completely from the Credit Report. It is also called as PFD. If they are willing to remove it, it is worth paying it and be done with it. If they dont accept to delete it from the CR then it is not advisable paying it as it will delay the removal from your credit report.
Moderator Emeritus
Posts: 16,382
Registered: ‎03-12-2007
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Re: Collections

lookingforhome wrote:
Will paying off collections increase your credit score?  Should you go ahead and pay off collections before applying for a mortgage loan or should you go ahead and apply for a loan and let the loan officer advise you as to what should be paid off?

If this is a collection being reported by a CA, paying it will have little or no impact on your scores.
Credit Profile:
FICO 9: EQ 833 ~ EX 828 ~ TU 824 (07-12-2017)
FICO 8: EQ 830 ~ EX 819 ~ TU 828 (07-12-2017)
FICO 8 Bankcard: EQ 851 ~ EX 849 ~ TU 851 (07-12-2017)
Credit History: 29 years ~ AAoA: 14 years
Total available revolving credit: 157K ~ Cumulative Util: 3% (1 CC reporting a balance)
Inqs: 1 EX (new)
14 Total Accounts on Reports: 9 open, 5 closed. 1 newly opened installment account

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