Is paying a collection really worse than not paying it?

[Anonymous]

I've heard many times before that paying an account that is in collections is a bad thing because even though it shows as "Paid," it updates your "fall off" date another 7 years. Is this true? I owe Bank of America $134, the collection company is willing to settle for $90, but I don't know what to do because I don't want to waste $90 if it's going to really help my credit report/score either way. Any advice?

[Anonymous]

See if the collection company will delete it from your credit report before you pay.    Try to make it part of the agreement.

[cdtotten]

Paying off a collection will not update the DOFD, the only date that matters for reporting purposes. I agree, that trying to get a PFD is a wise choice if possible. Just remember, that paying off a collection will have no effect on your fico score; however, if it is a legitimate debt then it is the right thing to do.

[Anonymous]

A paid bad account is just as bad as a unpaid no difference point wise it will not help you just to pay it. The account might hurt you if it gets updated and the account is old but won't effect your dofd. I would highly recommend  to get them to do a PFD = paid for delete, and agree to pay the whole amount if you can I can almost guaranty that you will be hounded for the balance even though it is only 44 bucks they will squeeze blood out of a rock if they can. Remember if you do get them to agree to a PFD make sure it is in writing because you might have to do a little fighting with the CRA's if it doesn't get removed . Proof on paper always helps when dealing with baddies . Also if you send them a letter make sure you get them to sign for it. Remember Always get everything in writing.

[Anonymous]

There's two ways to look at this. Although I agree you should try and a PFD, the reality is most CA's wont agree to it. That doesnt mean you shouldnt try every avenue possible to get that arrangement, but do so with your eyes wide open.

The two issues here are FICO score and manual reviews. No, a paid collection wont affect FICO at all; however, credit is more than a FICO. Many creditors do a manual review before approval, and where you might get a denial with an unpaid collection, you might get it if its paid.

So, in short, for FICO a paid collection is the same as unpaid, but in the real world, paid is better.

[MarineVietVet]

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@Anonymous wrote:

A paid bad account is just as bad as a unpaid no difference point wise it will not help you just to pay it. The account might hurt you if it gets updated and the account is old but won't effect your dofd. I would highly recommend  to get them to do a PFD = paid for delete, and agree to pay the whole amount if you can I can almost guaranty that you will be hounded for the balance even though it is only 44 bucks they will squeeze blood out of a rock if they can. Remember if you do get them to agree to a PFD make sure it is in writing because you might have to do a little fighting with the CRA's if it doesn't get removed . Proof on paper always helps when dealing with baddies . Also if you send them a letter make sure you get them to sign for it. Remember Always get everything in writing.

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This doesn't apply to collections. I have been guilty in the past of spreading this in error. Since HTSU explains things MUCH better than I can I will C&P this from one of her posts:

Collections are scored off the date of assignment, not the DOLA. A change in DOLA shouldn't affect the score. .

This is such a common belief that we're trying to find examples with before-and-after reports where it happened, in order to see what's going on. If either the CA or the CRA is handling the data incorrectly, it needs to be corrected.

Here's a thread discussing this: Settle or Pay in Full?

Again, I'm not saying that it doesn't happen, but it's not supposed to, if the CA is reporting correctly and if the CRA is putting the info into the correct data fields.

I have begun to try and undo some of the harm I've done in the past by giving out incorrect information about collections.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".