Re: According to the Myfico website one of the things you can...
04-26-2007 04:27 PM
"Paying off the debts that resulted in a collection, judgment, or tax lien won't remove it from your credit report, but it will reduce the damage it causes to your score. But be aware that paying off a collection, judgment, or tax lien will make it recently active, which could cause your score to drop in the short term."
Think about what is being said here. If the recent activity date on a collection is 4 years ago, it hardly has any effect on your score. However, from what I read above it looks like all FICO sees is the "Last Date of Activity." Since FICO is just an algorithm, it seems to me that it would make absolutely no distinction between a 4 year old collection that you just recently paid, and a BRAND NEW collection. If all it sees is that date, and the date is updated to the present, how could it be that the effect would be any different than a new collection?