Help with Paid Collection

[inquring_minds]

I recently completed a payment plan for an old bill.  I was unaware of "PFD" until I recently joined myFICO. The account is now paid in full.  Will I possibly see a drop in my credit scores because of this? I read it could happen somehere.

Suggestions?

inquiring mind wants to know...

[Anonymous]

Fair-Isaac has supposedly implemented a patch for the credit scoring bug that used to tank someone's FICO score for paying off a debt.

That said, you probably won't see any love from FICO for paying that account either. FICO scores paid collections exactly the same as unpaid ones, with one caveat (see below). This is one of the biggest bones I have to pick with the FICO scoring system.

So what's the caveat? If a charge-off or collection is relatively new, and it's being reported as a revolving balance, paying it off can reduce your overall utilization. This will help your credit score (though you'll still suffer a ding just for having a derogatory account).