Posts: 17,419
Registered: ‎07-14-2009
Re: Paying off collection effect on score

DougSmith81 wrote:

I had this same question. I paid off my First Premier card in March of 2012, it had been charged off but I wanted to take care of my responsibility for the debt. It now shows a zero balance, but still shows up as an adverse or negative account. Because of this I am hesitating to pay off the last of my $900 of debt because I am worried about it hurting me instead of helping me. You are saying the balance is what dirves the FICO score, as opposed to the it being classifed as negatitve?

Hi there.


I hesitate to speak for llecs because he is much more knowledable than I am but I will only say that the balance of any collection doesn't matter. FICO only looks at the collection itself.


A charge off balance however sometimes can be scored differently IF both the credit limit and balance are being reported. In that case the account is being factored into your utilization. If you pay the balance on the CO it can lower your utilization and likely help your score. But again this is only true of both the CL and balance on a CO'ed account are being reported.


So let me ask you; are both the CL and balance reporting? If either one is missing from your reports then this account is not part of your utilization and paying off the balance won't make any difference as far as scoring is concerned. Under a manual review it might be looked at favorably that you were willing to pay a debt.