New Member
Posts: 10
Registered: ‎11-16-2012
Re: Paying off collection effect on score

Hey guys, just food for thought.

You're correct that the balance on the collection account does not make a difference (aside from it's affect on CC utilizations as mentioned above). However, collection agencies report to the CBR's as a form of leverage-- incentive to get you to pay. Remember that all companies that report to the CBR's pay a subscription fee for that service, to report you (and to collect information about you in an effort to collect). Long story short, once you pay off your collection account, the CA has no reason to continue reporting you. Often times, a paid off collection will stop being report (by the CA) after only a few months. However, if you never pay it, it will stay on their til the bitter end, 7-10 years. In short, paying it is always best, if you can afford it. Your goal is to get the whole account OFF your credit, and paying it is the first step.

I work full time as a credit analyst for one of the largest credit card issuers in the U.S. But, I am also a consumer trying to build my own credit!