Can I improve my credit score by paying off closed charged off credit cards?

[Anonymous]

Hi all,

I'm new here and want to start repairing my credit. I got into a bind a while back so opened up a few credit cards, maxed them out, and then was barely living pay check to pay check so couldn't afford to pay them off leading to them being charged off. One of them appears to be in collections. When I started making more money, I started paying one of them off, hoping to improve my credit score. I figured that once it was paid off, my score would go up.  I had planned on starting to pay the others off, but while researching the best way to do that (considered consolidating so I'd only have one monthly payment) I came across conflicting advice.

Some places seem to say that paying them off won't improve my credit score at all. That the accounts will remain on my report just showing as $0 balance until the 7 year period is over and will factor into all credit-related decisions exactly as if I hadn't paid them off because they're not counted toward total debt, but rather just negative marks.

Credit sesame seems to say that I can pay off these cards, dispute with the credit bureau after 30 days and then have them all immediately dropped from my report. They wrote a blog about a guy who did exactly that - paid off 12 cards in collections (that might be the difference - only one of my 4 cards is in collections) and raised his credit score something crazy - a hundred points or so - in only a few months. He just paid all the cards, disputed with the bureau after 30 days, and bam - good credit. Everywhere else though seems to say it's basically a lost cause.

I was told by a few people that if I have the money to start paying off the cards, I should just use it to open a few secured credit cards and just keep about $15 on each of them. I'm told this will raise my credit much more because I have zero open accounts right now. I used credit karma's simulator to see what would happen if I opened a new card or took out a loan, and it claims that even just opening a card with a $200 balance ( I think that's the minimum for a lot of secured cards) would raise my score almost 40 points - from 552 to 590.

So now I'm lost on where to start to improve my score. I want to move, but I know most land lords do a credit check. I was even denied a job I really wanted last year because the employer ran a credit check....Not sure when that started happening or why that should factor into a decision unless the employer frequently offers loans to employees. Pretty positive my crappy credit score isn't reflected in my troubleshooting and coding abilities -_- 

Anyway, any advice will be greatly appreciated! Someone suggested I use a credit repair or negotiation service to help my get the accounts removed from my report after they're paid off. If you think this is a good idea, do you have any suggestions as to what service/company to use?

[Anonymous]

Any credit card charge off that is reporting a balance is still part of your utilization. It's always better that it's paid to show a zero balance. Usually a charge off that's is not paid will continue to report monthly therefore your score will not be able to improve. Best is to try to do a pay for delete agreement to get them removed that is best scenario.

[Anonymous]

I was in a similar position a few years back.  I had several CCs that were charged off and/or sent to collections.  I chose to ignore them to my detriment because I ended up with being served with three legal actions to recover the money.  I was able to resolve these because I had the cash to do so fortunetly.  I didn't resolve them to improve my score but I believe it did (hard to say because there are so many factors).  I can tell you that I started getting approved for better cards with much higher limits when all of my collections were closed, they were still reporting but I believe lenders look at open collections differently then closed.    I doubt that anyone can answer your questions with any precision but I believe that settling collections is a good practice to avoid legal action (very stressful) and to move forward.  Last month my last collection aged off my reports, as they age they have less impact so I don't think it falling off had much impact.  I was able to get a recent medical collection removed from my wife's report and her report shot up 62 points.  I would research pay for delete here, that would be the best of both worlds, get rid of the debt and the negative item at the same time.  Not easy to do but it can be done.