Active Collections Help

[Anonymous]

Credit Karma shows me with 2 accounts in collections, which appear to be reporting monthly. One account is 4.5 years old (OC Capital One, now Portfolio Recovery), last updated September 8, 2018, the other is 1.5 years old (OC Verizon Wireless, now Jefferson Capital), last updated September 14, 2018. These accounts don't show when I access FICO Credit Scorecard through my Discover app.

I understand the general concensus is that once the derogatory hits your record paying it off won't do much to improve your credit score, but is that still true when the collections accounts are actively reporting, as mine seem to be?

Several months ago I paid in full two other accounts that were in collections on Credit Karma. They currently show as paid and closed, with a $0 balance. I was approved around the same time I settled these debts for secured Discover and Capital One cards, so it was impossible to determine the net result of paying the collections off due to the abrupt spike in score upon approval.

These are my only negative marks. I'm working hard to prioritize efforts and restore my credit score, which at the moment is terrible--any advice is helpful and appreciated.

[RobertEG]

Similar to contined reporting by a creditor of increasing levels of delinquency on your OC account, such as updating a 60-late to a 90-late, updated reporting by a debt collector that the debt remains unpaid (i.e., the collection remains open with a balance), that updating shows that the period since initial delinquency has increased,  That affects the scoring of the collection.

If a collection is paid, the debt collector must promptly update the current status to paid, $0 balance.  While that does not decrease the overall period since initial delinquency, it does freeze the level of delinquency at that period.  The debt collector can no longer continue to report an contined delinquency status, and thus the scoring effect of the collection begins to age.

In addition to preventing further increase in the overall period of delinquency, if the account is revolving and the creditor is also reporting, they are also required to update the debt balance to $0, which can result in improvement in your % util scoring of the revolving account.

Aside from moral obligation to pay a legit debt, paying can have positive scoring effects.

[Anonymous]

Thanks for the feedback, Robert. I intend to settle the outstanding debts, your insight will help me plan out the next several months as I rebuild.

Thanks again.