topic Paying a collection account in General Credit Topics

Paying a collection account

Anonymous — Thu, 01 Jun 2017 16:54:11 GMT

If I pay a collection account will my credit score go up or stay the same just because it's a collection account that will remain on my report?

Re: Paying a collection account

Revelate — Thu, 01 Jun 2017 17:00:32 GMT

@Anonymous wrote:
If I pay a collection account will my credit score go up or stay the same just because it's a collection account that will remain on my report?

Depends on algorithm and collection size, but generally for current credit scoring purposes paying a collection doesn't help; does help for underwriting though.

That said check over in the Rebuilding forum, you may be able to negotiate a pay for delete (you pay, they airstrike it, which is in all ways a positive) or other methods for getting the collection off altogether.

Re: Paying a collection account

RobertEG — Thu, 01 Jun 2017 17:41:46 GMT

When a debt collector reports an update, either monthly or upon payment of the debt, it informs FICO that the debt remained delinquent up to that date.

That effects the age of the unpaid debt, and permits the collection from aging in impact.

Once paid, further updates cease, and the status is no longer an open, unpaid collection on a delinquent debt.

Re: Paying a collection account

fltireguy — Fri, 02 Jun 2017 00:56:54 GMT

For example. I had an old Target CO on my reports. CL $500, with a $1600 balance reporting, updated every single month, and showed the card was maxed and then some.

Called Target, worked out a settlement for about $533 ( IIRC), paid that amount, and the account updated as settled for less than amount owed. The balance and CL both became 0, and my scores jumped between 20-40 points (depending on the CRA - TU went up 40)..

Re: Paying a collection account

Revelate — Fri, 02 Jun 2017 01:18:17 GMT

@fltireguy wrote:
For example. I had an old Target CO on my reports. CL $500, with a $1600 balance reporting, updated every single month, and showed the card was maxed and then some.
Called Target, worked out a settlement for about $533 ( IIRC), paid that amount, and the account updated as settled for less than amount owed. The balance and CL both became 0, and my scores jumped between 20-40 points (depending on the CRA - TU went up 40)..

Not to quibble but a CO is not a collection, it's a charge off and yes those do update monthly and are scored differently than collections.