Will Paying-Off Collection Accounts Increase My Credit Score

Will my credit score improve if I pay off my collection accounts?

I am trying to fix my credit. I have several accounts that have been sent to a collection company. If I pay off these accounts will it improve my credit score? Will they stay on my report as a collection account, but show that they were paid? Will they stay on my report for 7 years from the date that the account was sent to the collection agency, or from the date they were paid?

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Highlights


  • Examine how paying off collections accounts affects your credit score.
  • Understand the benefits of paying off old debt, aside from the effects on your credit score.

Should you pay a collection account? Great question! Before we get to your question, let’s define some words and phrases collection agents use, and talk about three issues you need to think about before taking any action.

If you have an unpaid debt, you may wish it just goes away. But original creditors and collection agents see unpaid debts as assets. Like almost any other asset, an unpaid debt can be bought, sold, or traded. Debt collectors and original creditors call bad debts “collection accounts.”

Your collection account can appear more than once on your credit report. Its history will start with the original creditor, and then reappear on your credit report as collection agents buy, sell, and trade your account. Your collection accounts may move through many collection agencies, and your credit report will show this chain of ownership.

What’s a Derogatory?

The credit bureaus — Equifax, Experian, and TransUnion — call collection accounts “derogatories.” Derogatories are negative accounts that drag down your credit score. Most collection accounts and other derogatories are allowed to appear on your credit report for 7 years. The starting point for the 7-year rule is the date of first delinquency. In other words, the 7-year clock starts when you miss your first payment.

ust because something appears on your credit report does not make it a fact. Review your credit reports once a year to dispute errors that harm your credit score.

Dishonest collection agents change the date of first delinquency to a later date. This violates federal law. They do this, it seems, to make a collection account appear longer on your credit report, thinking its lengthy appearance will add pressure for you to pay the debt.

Pay or Ignore a Collection Account?

You may wonder if it is worth your while to pay a collection account. Let’s look at this question from three different angles:

  1. Your state’s statute of limitations
  2. The credit report 7-year rule
  3. A collection account’s impact on your credit score

Let’s get some misinformation out of the way first. You may read statements from some who say, “You don’t have a legal obligation to pay a collection agent anything because you never had a contract with the collection agent.” This argument doesn’t hold water. Original creditors reserve the right to sell their collection accounts. This gives the collection agent who buys your collection account the legal right to collect the face value of the debt. You may have some other reason you do not need to pay an old collection account, but it won’t be due to this bogus argument.

1) Statute of Limitations

A statute of limitation is a time limit. Once the statute of limitations clock runs out on a crime, for example, the district attorney can no longer charge anyone with the crime. Statutes of limitations for debt are a bit different and more complicated.

For debt, the statute of limitations is a civil matter. Being in debt is not a crime. When someone files a civil lawsuit against you, always look at the statute of limitations. If the statute of limitations clock has run out, then you can file a motion with the court that says, “Hey, everything here might be true, but because the clock has run out, the court must dismiss the case.”

tatute of limitations rules can get tricky if you sign a contract in one state then move to another, or if you and the other party reside in different states. Read the Bills.com article How to Tell Which Statute of Limitations Applies to You if your facts are complicated.

Every state’s statute of limitations rules vary. Learn your state's statute of limitations rules for the type of debt in your collection account. If your state’s statute of limitations clock on your collection account has run out or is about to run out, you can use this to your advantage. More about this later.

If your collection account’s statute of limitations clock has expired, you have no legal obligation to pay the debt. If your collection account’s statute of limitations clock as run out, a collection agent cannot use a lawsuit threat to try to convince you it’s serious about collecting the debt. Any threat of this kind is not only hollow, it is also illegal.

Two confusing things about statutes of limitation and collection accounts trip-up many people:

  • An expired statute of limitations clock does not prevent lawsuits. Some original creditors and collection agents file lawsuits against consumers even though the statute of limitations clock has expired. This is legal in all but two states. You may wonder why someone would file a lawsuit they know could be defeated so easily. Many consumers do not understand statutes of limitations laws, or bother to hire lawyers to defend them. This is unfortunate, but consumers who do not defend themselves lose by default. Consult with a lawyer if you receive a written notice of a lawsuit.
  • The statute of limitations clock is separate from the 7-year credit report clock. Some state statutes of limitations are shorter than 7 years, but some are longer. Keep these two clocks separate in your mind because they are for separate things.

2) The Credit Report 7-Year Rule

As mentioned above, most collection accounts can appear on your credit report for 7 years. Collection agents cannot change the date of first delinquency to make the collection account appear for more than 7 years.

he 7-year rule can be found in the Fair Credit Reporting Act, a federal law that sets the rules for credit reports and the companies that create this information, including Equifax, Experian, and TransUnion.

Dishonest collection agents will claim that as long as the collection account appears on your credit report, you have a legal obligation to pay the debt. That’s not true.

If the 7-year clock on your collection account is about to run out, you can use this to your advantage. More about this later.

3) Credit Scores & Collection Accounts

A collection account harms your credit score as long as it appears on your credit report. However, credit score software like FICO and VantageScore put less and less weight on a derogatory the longer it appears on your credit report. A fresh collection account harms your credit score more than one that is 6 years old.

Generally, credit scoring software does not reward or punish you for paying off an old collection account. Your credit score is damaged when a creditor reports negative things about you to Equifax, Experian, and TransUnion. The most damaging are missing payments and allowing your account to become so delinquent it becomes a collection account. Unfortunately, paying-off a collection account usually does not reverse the damage caused by your missed payments.

he two biggest credit score companies are FICO and VantageScore. About 90% of lenders use FICO. FICO does not notice if a collection account is paid or unpaid. VantageScore treats paid-off collection accounts differently. VantageScore ignores paid-off collection accounts, which reverses the damage caused by the delinquency.

Should I Pay or Ignore My Collection Account?

If a collection agent is pressuring you into paying a collection account, follow these four steps.

Two Collection Account Examples
Source: Bills.com
A collection agent contacts…
Facts …Sharon about a $650 debt she stopped paying 5 years ago …Tom about a $2,000 debt he stopped paying 2 years ago
Statute of Limitations 4 years in Sharon’s state 6 years in Tom’s state
Pay the debt? No legal obligation to pay because the SOL clock expired 1 year ago Tom may be obligated to pay the debt. He should validate the debt, and proceed accordingly.
  1. Validate the debt to make sure you really owe the debt. Just because a collection agent claims you owe a debt does not mean you do. Follow the directions on the page just mentioned to learn the steps to validate a debt properly. If the collection agent cannot validate the debt, it may not collect it.
  2. Learn your state’s statute of limitations to see if you have a legal obligation to pay the debt.
  3. If the time from your last payment on the debt to the present is longer than your statute of limitations, then you have a defense you can use if the original creditor or the collection agent file a lawsuit against you. In other words, you have no legal obligation to pay the debt.
  4. If the time from your last payment to the present is less than your state’s statute of limitations, then you cannot use the statute of limitations as a defense. In other words, you may have a legal obligation to pay the debt.

If the debt has not reached the end of your state’s statute of limitations, then consider negotiating a settlement to the debt.

When it comes to lawsuits, creditors are unpredictable. Some will file a small claims lawsuit for debts less than $500. It would be logical to assume creditors sue only people who have the ability to pay a judgment. However, Bills.com readers have reported creditors suing people with no income or assets.

Pay Debt to Improve a Credit Score?

If you see a collection account or two dragging your score down and you want to improve your score, then your options are limited.

earn 7 techniques to improve your credit score. All of these techniques cost you little or nothing, are not gimmicks, and are based on information from FICO.

As mentioned, FICO will not increase your credit score when you pay-off a collection account. Because almost all mortgage lenders and many auto finance companies use FICO, paying-off a collection account will not increase the score lenders see.

Is it wasteful to pay-off a collection account? No, for three reasons:

  1. Your creditworthiness is more than a number. Lenders look at more than just your FICO score when determining your creditworthiness. Many lenders view paying off old debt as a sign of goodwill and trustworthiness. The lender looks beyond your score to see patterns of payments and commitment to financial obligations. A prospective lender likes to see a person who pays their debts, even if it notices a few bumps along the way.
  2. Your amount of debt matters. Lenders look at your debt-to-income (DTI) ratio as an important measure of your ability to repay a loan. Paying-off an old collection account will improve your DTI ratio and may make you a more attractive loan candidate.
  3. You avoid a lawsuit when you settle. If the statute of limitations has not run out on your collection account, the creditor can file a lawsuit against you. If it wins, the court will award it a judgment. The judgment will harm your credit score. The judgment creditor can use the judgment to garnish your wages, levy your bank accounts, place a lien on your property, and ask the sheriff to seize your personal property.

Visit the Bills.com credit resource page to learn more about credit scores and credit issues.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

161 Comments

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  • 35x35
    Oct, 2012
    erin
    My credit score is 580, and I found out an old debt from over five years ago, totalling around $5000, is still showing up as being outstanding. I finally was able to get an official letter from the lawyer firm that garnished my wages until i paid what i had owed in-full. Who do i need to send this letter to, in order to raise my credit score, so that i can finally apply for a home loan??? Also, is my husband's bad credit going to affect me applying for the loan?
    0 Votes

    • 35x35
      Oct, 2012
      Bill
      Under the Fair Credit Reporting Act, derogatory accounts may appear may appear on your credit report for up to 7 years from the date of first delinquency. Take a look at one of your credit reports by accessing AnnualCreditReport.com and find the date of first delinquency on the account in question. Add 7 years to the date of first delinquency, and that is when the debt will fall off your credit report. Your credit score should show some improvement at that point, assuming you have been paying your other accounts on time.

      If the account is showing a debt outstanding, and you paid the debt in full, then dispute the account with each of the consumer credit reporting agencies that report the incorrect account status.

      Both spouses do not need to apply for a mortgage. If your income and credit are sufficient to qualify for a loan on your own, your husband's bad credit will not be a barrier. If you need his income to qualify, then it will be a problem. See the Bills.com resource Mortgage When a Spouse Has Bad Credit to learn more.
      0 Votes

  • 35x35
    Jul, 2012
    Heather
    My credit score is 527. I have $6700 in collections. Most are unpaid medical bills, but $1800 of it is credit card debt (3 closed accounts). I would like to improve my credit score. In what order should I begin paying off this debt? Should I pay credit cards before medical bills, or age of accounts in general? Thank you.
    0 Votes

    • 35x35
      Aug, 2012
      Bill
      Paying off old, delinquent debts does not immediately greatly improve your credit score. The damage to your score that was done when the accounts become delinquent and then went into collections is not undone when the debts are paid. However, it is a positive factor to bring a debt to $0 balance. It does have a limited, good effect on your credit. More importantly, it eliminates the debt leading to a judgment that would further harm your credit and could be enforced by a wage garnishment or bank levy.
      0 Votes

  • 35x35
    Jun, 2012
    krystle
    I am contacting collection agencys and trying to get letters as proof that i am settled the account. My score now is 521 and i have these accounts for 5 years now i have one care credit account and a car loan for 47k how much will my score improve when i settle all this old debt. I tryed negotiating money for delete but they said no 3 will post paid in full and 5 will state settled for less amount. I want to buy a house and need a 620 thanks
    0 Votes

  • 35x35
    Apr, 2012
    Mary
    My husband and I had a car repo'd Aug 10. The lender sold the car at auction and sent the balance to a collection agency. We are trying to clean up our credit now. We just got a new loan for a car. I contacted the lender from the repo'd car and they refer me to the collection agency. I called the number for them and it gives some error message and hangs up. I looked up the agency and got two different number for it 1 a toll free and the other a long distant...no biggie free long distance on home and cell phone. Toll free number did not work, the long distance number goes to a voice mail and they never call back. I have left a message a week for 3 weeks. I told the salesman this where we bought our new car and he could not believe it. I have no clue what to do. First I thought "OK, I'll just dispute it." Do I submit two separate dispute letters to each credit company one for me or one for my husband? This is where is gets weird. The lender appears on our credit report but the collection agency does not. The lender keeps sending me to them. What do we do?
    0 Votes

    • 35x35
      Apr, 2012
      Bill
      My guess, note my word choice, is the original creditor sold your collection account to a collection agent. The collection agent is no longer in business, based on the behavior you described. This is good news because you can dispute the debt with the credit reporting agencies (the credit bureaus) and no one at the defunct collection agency will respond to the credit reporting agencies' request for information. Without a response, the credit reporting agencies must, under the FCRA remove the challenged item.

      I will assume both of you were joint borrowers on the vehicle loan in question. If so, either one of you can file a dispute with the credit reporting agencies.

      Using the instructions at the page I just hyperlinked, file a dispute with each credit reporting agency reporting the repossession.
      0 Votes

    • 35x35
      Apr, 2012
      Mary
      What about the fact that the lender is on our credit but the collection agency is not? How will that factor in when submitting the dispute?
      0 Votes

    • 35x35
      Apr, 2012
      Bill
      Excellent point! The fact the collection agent never reported this debt to the credit reporting agencies is further evidence it is out of business or asleep at the switch. Disputing a non-existent derogatory is pointless.

      Take these two courses of action:
      • Dispute the debt as reported by the original creditor. You have three first-class stamps to lose, and if the creditor fails to respond, you win.
      • Work on improving your credit score.
      0 Votes

  • 35x35
    Apr, 2012
    Jen
    My boyfriend and I were in the midst of buying a home using his VA loan. Because we are not married we were only running the loan through his credit. We had a preapproval and put an offer in on a house. The home appraised 35,000 under the offer and the sellers wanted to full amount so the deal fell through. We had to reapply for another loan since the other deal falling through closed out the original loan. Upon trying to get a new pre approval letter the second time he was denied. Originally there was only one collection for $89. Once we went for the loan again a new collection had popped up from Dish Network. This is a claim for $1000 because they claim they did not receive back DVR boxes some years ago when we had service with them. It was advised that we pay the dept in order to get the another loan. We have contacted the debt collection company and they offered him an option to make payments. We are prepared to pay the debt but he was reading that making payments might look better. My concern is this possibly prologing us being able to move forward with a loan. What would be the best way to handle this debt? Thank you
    0 Votes

    • 35x35
      Apr, 2012
      Bill
      The faster you can bring the debt to $0 balance the better. Either pay it in full or negotiate a reduced balance payoff.
      0 Votes

  • 35x35
    Mar, 2012
    Melissa
    My husband and I are hoping to buy a home. I had 2 accounts in collections that I believe to be re-aged. The original debtors are Sears and Sprint and those fell off my credit report some time ago. However the collections agencies that picked up the debts are still showing up on my report and not due to fall off for a year on one and 2 years on the other, that would be to long for them to keep posting correct? I was told to obtain proof of the debt from the original creditor and send it to the collection agencies and demand under FCRA Section 605 that they be removed. However if I contact the original creditor to obtain proof could that possibly restart my debt?
    0 Votes

    • 35x35
      Apr, 2012
      Bill
      The key information to learn is the date of first delinquency for the accounts you mentioned. The date of first delinquency is the starting point for the 7½-year clock we mentioned in the original answer above. It is common for unscrupulous collection agents to report an incorrect, later date of first delinquency to the credit reporting agencies. It is a violation of federal law, the FCRA, to report an incorrect date of first delinquency.

      You mentioned sending a letters to the collection agencies demanding they remove the derogatory information that is older than 7½ years. I think that is an excellent idea. Take care when making a reference to the accounts in question. You do not wish to restart the statute of limitations that may have expired on the accounts by reinstating the account. Notice I mentioned "statute of limitations." This is a separate issue from the FCRA 7½-year rule, and people confuse these two often. See the Bills.com article Statutue of Limitations to learn more about this legal issue.

      When you write your letter, do not say, "my account" or "my debt" or "the amount I owe" or other similar phrases implying responsibility for the debt. Instead write, "the account you attribute to me" and "account No. abc123" and so on. Avoid the use of "I, me, my" when referring to these accounts. Consult with a lawyer who has consumer law or civil litigation experience if you have a concern about your letters.
      0 Votes

  • 35x35
    Mar, 2012
    Yang
    Hi, I have a credit score of 616 AND a student loan of $6000. I really want to buy a house. If I can find the money to pay my whole student loan off all at once, how will it reflect on my credit score? will it be a good idea? Or should I just keep paying the mim of the loan?
    0 Votes

    • 35x35
      Mar, 2012
      Bill
      Just paying off the loan will not increase your credit score. In fact, it may have a negative effect. The main components of your credit score are timely payments, credit utilization, credit mix (different types of loans and credit), the amount of time that accounts have been active, and number of new accounts.

      If you have a large variety of accounts, then your credit score may not be affected. If not, then your score may actually drop. Keep making the payments on time. One other factor to consider when taking a new loan is your overall Debt to Income ratio. This will include your student loan. For more information read the Bills.com articles about home purchase and mortgages.
      0 Votes

  • 35x35
    Mar, 2012
    Elizabeth
    I am looking to buy a house but I have 5 collection which totals to $800. My credit score is 610, If I pay it would that lower my credit score?
    0 Votes

    • 35x35
      Mar, 2012
      Bill
      Paying an old collection account can lower your score for a while. The reason for this is that the accounts are given greater weight when there is new information on them. What you should do is speak with a loan officer to see if you would have to pay off the collection accounts in order to qualify. If you do, paying them now is better than waiting to do so, as you can start working to improve your credit score sooner.
      0 Votes

  • 35x35
    Mar, 2012
    Jay
    I have a credit score of 670 i have 3 credit cards in good standing all under 30%. I have one credit card in collections for 5000. I want to apply for a school loan but i'm afraid i will be denied. Once i pay off my collections, how long will it be before i can get a school loan?
    0 Votes

    • 35x35
      Mar, 2012
      Bill
      School loans are not always based on your credit history or score. For instance, your credit score is not an issue when you are applying for federally insured student loans. These loans are primarily based on need, not on your past credit performance.

      If you apply for a private student loan, your credit will be examined. Whether you have to pay an old collections account depends on the lender's decision. Speak to the private lender to hear its decision.
      0 Votes

  • 35x35
    Mar, 2012
    Nathan
    I have a very low credit score between 515 and 598 depending on the reporting agency. I recently paid off two judgements that I've had since 2008 and paid off all of my credit card debt. I have a car loan that is in good standing. How long will it be before I start to see some improvement in my score and how much improvement am I possibly looking at? Also, why is there such a large difference in FICO scores between the different agencies?
    0 Votes

  • 35x35
    Mar, 2012
    naveen
    I had one account in collection from June 2011 and I paid it off 2 days back. Will there be a increase in my credit score and if yes how long will it take to reflect.
    0 Votes

    • 35x35
      Mar, 2012
      Bill
      How fast and how much your credit score will rise depends on what else is on your report. Assuming you don't have other current derogatory marks on your report, I would say that your score will start to improve within six months.

      See the Bills.com articles Delinquency, Debt Settlement & Credit Scores and Short Sale, Foreclosure & Your Credit Score to learn how certain events harm a credit score, and how long it takes a score to recover.
      0 Votes

  • 35x35
    Feb, 2012
    Lisa
    I want to fix my credit. I have four accounts in collection, which are pretty recent. I also have a repossession from 2007. I have a student loan and one credit card in good standing. If I pay off the collection accounts will it help my score? How much of a drop in my score is because of the repossession?
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      The repossession damaged your credit score. See the Bills.com articles Delinquency, Debt Settlement & Credit Scores and Short Sale, Foreclosure & Your Credit Score to learn how certain events harm a credit score, and how long it takes a score to recover. The repossession was preceded by a number of missed payments, which harmed your score, too. In general, the higher your score is, the more it drops due to a derogatory mark.

      If your collection accounts are recent, then paying them will help your score and protect you from collection efforts the creditors can pursue.

      Continue to pay your student loan and one credit card as agreed, keep the balance on the credit card to less than 30% of the credit limit (pay it in full when you can afford to do so), and try to open one other account, so you have three active tradelines in good standing.
      0 Votes

  • 35x35
    Feb, 2012
    Nina
    When I was 18 I opened a lot of credit cards and after 2 years I stopped paying them. Recently I got engaged and I am 23 now and my credit score is 605. I finally was able to get a car loan with a very high interest, but I also got a judgement for 2089! So I decided to start paying off all my debit it totals to 7500. Will this help because it shows most of these accounts should fall off in 2013? I'm just afraid that by paying it off I am hurting my credit instead of helping it
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      It will help your credit to pay off your debt. It also protects you from wage garnishments, if you arrange payments with the creditors that have a judgment against you.

      You can have very strong credit, even with your past history, in about two years. Work to have at least three active accounts in good standing and keep your credit balances below 30% of the credit limit you are granted.
      0 Votes

    • 35x35
      Mar, 2012
      Nina
      I have a credit card that was charged off and states I filed for bankruptcy, which I did not. This appears on my TransUnion report only. I spoke with the creditor and they claim it is not in bankruptcy but TransUnion state that my dispute is a frivolous dispute, which isn't and they want me to provide court documents. I don't understand how I can provide court documents if I never filed for bankruptcy!
      0 Votes

    • 35x35
      Mar, 2012
      Bill
      What your unfortunate story points out is a lack of oversight, or check-and-balance, over the credit reporting agencies. If an anonymous clerk presses the "frivolous" button next to the record of a consumer's dispute, the consumer has only two distasteful choices — live with the inaccuracy they complained about or file a lawsuit against the credit reporting agency. Consult with a lawyer who has experience litigating against the credit reporting agencies to learn the costs of filing a lawsuit for libel.
      0 Votes

  • 35x35
    Feb, 2012
    Amanda
    Hi, my husband and I were looking into buying a house this year. By may actually, we paid off all our credit cards and we have a title loan with a balance of $900. As we were paying off our bills we checked our credit score. My husband noticed that his collection from 2005 with a balance of $1,400 showed up this month saying its recent. He is currently in the process of trying to dispute it. Because its almost been 7 years. Would it be better off to pay it off, or just apply with the collection on there. How would it affect his score or our percentage rate with that collection showing that it's new? But it really isn't. Any advice would help. Thanks!
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      Amanda, I can't tell you exactly how having the collection account show as a new account will affect your score, but I can say that the effect will not be positive.

      I recommend disputing the re-aging of the account. Also, check with a mortgage loan officer and find out whether you would be required to pay off a collection account that is so old in order to qualify for a loan.

      It may be the case that the statute of limitations has expired on the debt, so paying it off may not be necessary. That may be why the collection agent is trying to re-age it, to get you to think that the SOL does not apply.
      0 Votes

  • 35x35
    Feb, 2012
    Jesse
    Hi, I have 3 accounts in collection and my score is 587! My 3 accounts are all medical, one for $133, $42, and lastly one for $750, I also have a closed credit account that has been payed as agreed for the last 2 years with only a $500 limit. I contacted the 3 medical company's and before reading this I paid off the $42 one and then the $133 I negotiated down to $59 and paid it off as well but I can't afford to do anything with the $750 one...now 2 questions. Will paying off the 2 small bills help my credit? Also if I start a payment plan with the $750 one which they agreed to drop to $467 will that be bad for my credit by making an old account fresh?? All of the accounts are from 2007. Thank you!
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      There is a benefit to bringing collection accounts to a $0 balance. How your credit score will be affected is greatly influenced by what accounts you have in good standing. You should always aim to have at least three active accounts in good standing. Also, keep your credit balances below 30% of the maximum credit limit you are granted.
      0 Votes

    • 35x35
      Feb, 2012
      Jesse
      The problem with having credit lines in good standings is that I can't get any credit lines to begin with... also would it be wise to start payments on that $463 account?
      0 Votes

    • 35x35
      Feb, 2012
      Bill
      You should look into a secured credit card, as a way to build your credit score and adding a tradeline. Just makes sure that any secured card you apply for reports to the three main credit bureaus.

      Paying the $463 may be a good idea, if you get in writing the exact terms to repay the debt at the reduced amount. As I mentioned, there could be a short-term drop in your score but paying the debt will both bring the debt to $0 and protect you from efforts to collect the debt.
      0 Votes

  • 35x35
    Feb, 2012
    Ramona
    My husband and I are looking to buy a house within a year from now and I wanted to see if you could steer us in the right direction. It is going to be in his credit which we were informed ranges from 586-596. He has two credit cards in collections(one of which I am making monthly payments on) and two little bills in collections that add up to 600 dollars. I was wondering if we paid off everything in collections which would leave a car loan that we always pay on time (about 8months old) if this would increase our credit any within the next 6-8 months. We are only 30 points away from being able to qualify for a mortgage. Thanks so much.
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      Yes, paying off the collections accounts and bringing them to $0 balance could be a good idea, especially if they are the types of collections that a lender would require you to pay off before closing your loan. If that is the case, then paying them off now is wise. If a lender would not require you to pay them, paying them now could temporarily lower your spouse's score, as the old accounts get greater weight when a the account is updated with your payment.

      Given the time-frame you are considering, I recommend paying them right now and then making sure that you have the rest of your credit report in order. Ideally, each of you should have at least three active trade-lines in good standing, including your car loan.
      0 Votes

  • 35x35
    Feb, 2012
    Cindy
    I'm looking to apply for a mortgage around August of this year and have a few blemishes on my credit. I have a few old medical in collections all totaling less than $1K, MyFICO.com just alerted me that my credit score in now 622, and now I'm not sure if paying those remaining debts will lower my score or increase it by August. I read your article above where it stated:"But with the new scoring system by Fair Isaac and Company, paying off old debt does not hurt your credit score because the scoring system distinguishes between new payments and new delinquencies," but I've also read the responses to user comments on that same article that seem to negate that statement. Will paying off those old debts now drag my score back down?
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      Questions like yours create a lot of discussion at Bills.com. Part of the problem in answering questions about credit scores is that we never know the whole picture. We do not know where the reader's credit score was before the derogatory event occurred, how many positive accounts the reader has, their account diversity, their debt utilization on other accounts (are accounts maxed-out?), and the age of the positive accounts. A credit score is the result of 10 variables for some readers, and 100 for others.

      In general, paying-off a delinquent account does not lift a credit score. Paying a delinquent account will not drag a score down, either. However, paying delinquent accounts and setting them to zero will improve a consumer's debt-to-income ratio, which lenders also weigh when determining credit worthiness.
      0 Votes

  • 35x35
    Jan, 2012
    Priscilla
    Hi, I am just wondering which scenario will benefit me the most. I moved and forgot to update my credit card company. It's been atleast 6 months since I'd used the card and forgot all about it! They turned my balance over to a collections agency. The amount is approximately $300. I am trying to find out if paying of the balance in full in one transaction would be as beneficial as making payments on time until the balance has zeroed. I can't decide if there would be a difference great enough to merit worrying about it every month or not. I would love your opinion!
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      Pay the debt in full or negotiate a reduced balance settlement. It is important to get some kind of agreement in place, so the matter does not deteriorate into legal collections down the road.
      0 Votes

  • 35x35
    Jan, 2012
    Kathleen
    Hi Bill, I am about to close on a house within the next 6 weeks and a collection needs to be taken off before I go to closing. It has been on my credit report for almost 6 years (25 dollar library fine). I have disputed to all three bureaus and 2 out of the 3 took them off because I was unaware of this collection. The bureau that did not take off the collection gave me a 641 credit score. The two other credit scores are both 650. (I need 620 to go into closing). My question is, would it be ok to just pay the collection now without affecting my closing and financing? I just want one less thing to worry about in preparation. Thanks!
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      Check with your loan officer. If the lender says you qualify without paying off the collection account, don't rock the boat. In most cases, collection accounts as small as your library debt and as old as it are not barriers to refinancing.

      It is standard practice for a lender's underwriter to pull your credit just prior to final approval and the funding of your loan. It is possible that if you pay the collection account, you will give greater weight to the old account and thereby lower your score. Proceed with caution.
      0 Votes

  • 35x35
    Jan, 2012
    Cristina
    Hi Bill, I had 7 accounts in collections which I have not made any payments for in about 3 years. 3 of those 7 accounts have been paid off in the past month, 2 which I called the company directly and paid the debt off with, and one was a car that I have paid off. I want to buy a car sometime in july or august, will paying off the 5 remaining collection accounts help me in improving my fico score so I can be approved for a car loan?
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      Paying off old debt will in the long run improve your score. Keep monitoring your credit card and make sure that you make all you payments on time.
      0 Votes

  • 35x35
    Nov, 2011
    Melissa
    I have just recently paid three medical collections that were reported to the credit bureaus ten months ago. I have been current with all other bills for 18 months. Should I expect my score to improve by this?
    0 Votes

    • 35x35
      Nov, 2011
      Bill
      Removing bad debt from your credit report will help you raise your score. The amount would depend on how significantly they were impacting your score and what other items you have remaining on your credit report.

      It is very good that you are paying on time, because this is the most important factor in determining your credit score. Follow Bills.com tips on improving your credit score and continue to monitor your credit report.
      0 Votes

    • 35x35
      Jan, 2012
      Melissa
      I finally got some collection accounts off my report. I saw a significant increase in my scores.(20-30 pts depending on the report.) md
      0 Votes

    • 35x35
      Jan, 2012
      Bill
      Good for you and thanks for sharing that information!
      0 Votes

  • 35x35
    Nov, 2011
    Hello, My 3 scores range from 516-504 (yikes, I know). I have my current report/scores from all 3 bureaus. I have a new car loan as of 5/11 that I pay on time, as well as a Badcock account and student loan I pay on time. There were delinquencies in the past on my student loan, as recently as this year. I also have some old debts that were charged off in 2007/08, and medical bills in collections. I want to negotiate settlements on these and get them all paid off within the next 4-6 mos. I am also considering a secured credit card to help boost my score, and I wonder if that is right for my situation. Is this the the right way to go, or am I missing anything else I could be doing? My goal is to be able to buy a land/home pkg (under $75k total) within the next few years. If I pay off these debts and remain current on my other payments...how soon could I expect to see a positive impact? I realize there is no overnight fix, but I would like to know what I'm facing and if my goal is realistic. Thank you!
    0 Votes

    • 35x35
      Nov, 2011
      Bill
      I can't give you a definite number of months it will take, but I do believe that your strategy and goals are quite realistic. The secured card is also a good idea, as long as it is reporting to the three major credit bureaus. If you can never miss a payment moving forward and save up enough money for a down payment, I think it is realistic to be positioned to buy a home in 1-2 years time, maybe even sooner with an FHA loan.
      0 Votes

  • 35x35
    Nov, 2011
    Linda
    Hello, I just recently checked my credit score it is 550. Im tryin to buy a house in february 2012. I have three negative medical accounts from 2010 that I sent documents stating I had insurance so they are reviewing this. I also have a t mobile account im settling with the company. So my question is will this all improve my credit score before I try to get a loan for a house in february? And paying off the accounts look good for me?
    0 Votes

    • 35x35
      Nov, 2011
      Bill
      I recommend that you speak with a loan officer that handles FHA loans. Some lenders will approve FHA loans for borrowers with credit scores as low as 580, which is not much higher than your score. Other lenders require a 620 minimum score, so shop around. Find out if the collections need to be paid in order for you to qualify for the loan.
      0 Votes

  • 35x35
    Nov, 2011
    claudia
    HI Bill, i have a score of 579 i know this is a very bad score, how can i rebuild it?? i have 2 delinquent accounts with stores credit cards there about 5 years old. should i pay them? and i tried applying for other credit card i didn't know it would affect me, WHAT CAN I DO?? is it ever going to get better??
    0 Votes

    • 35x35
      Nov, 2011
      Bill
      Paying off old delinquent accounts can hurt your credit in the short term, as the current activity (paying-off the account) gives the account greater weight on your score.

      Check on the statute of limitations for debt in your state. If the debt has passed the SOL, you may be able to negotiate a low dollar settlement to bring the account to a $0 balance.

      Other than that, take the basic steps you need to improve your credit score.
      0 Votes

  • 35x35
    Nov, 2011
    Matt
    Hi Bill, I just took your advice and checked my credit history for the first time. Turns out, I have a 150 dollar collection on my credit report from 2005. This is from a medical bill in college that I thought my insurance had covered, but they apparently did not. Is this hurting my credit score significantly? And what is the best way to handle this now? Thanks for your help!
    0 Votes

    • 35x35
      Nov, 2011
      Bill
      The good news is that the account will drop off your account 7 years from the date of first delinquency, according to the FCRA. If you see it has not dropped off, at that time, file a dispute with the credit bureaus.
      0 Votes

  • 35x35
    Nov, 2011
    melanie
    I just found out a medical bill went into collections a couple days ago. should i pay the collection agency or should i pay the provider of the services?
    0 Votes

    • 35x35
      Nov, 2011
      Bill
      Validate the debt. If the collection agent can validate the debt properly, then you can pay the collection agent safely.
      0 Votes

  • 35x35
    Oct, 2011
    Skit
    bill, i have bad credit. 554,534,522. I have 5 delinquencies of a total of 2,000.00. Some are about 5 years old. should i go and pay everything off? and i also have 50 credit inquiries!! i know that is a lot. I been trying to apply for credit and didn't know it would hurt me. I'm new to this and want to build my credit back up to 720 and better. what do I do? should i just pay it off? i currently have a car payment(current) and a secure MasterCard from Capitol One, and also a school loan that is current. :( 550 credit score is hard to live with. Nobody can help me. Please help!
    0 Votes

    • 35x35
      Nov, 2011
      Bill
      If rebuilding your credit score is your main goal then there are a number of things for you to consider, before deciding to pay off those five delinquent accounts.

      Statute of Limitations: If the statute of limitations has passed, then you may not ever have to pay the debt. If the creditor attempts to collect, you can use the SOL as a defense.

      Age of Debt: A 5-year-old line is relatively old. The older the debt the less impact it has on your credit score. Paying off an old account would make an old, stale account fresh and could actually lower your score.

      Credit Inquiries: You can make multiple credit inquiries for the same financial product within a 14-day period. Although they will all show up on your credit report, they will only be considered as one inquiry in terms of their effect on your score. It is important to shop around for financial products, in order to get the best deal, but remember to stay within the 14-day time frame, to decrease the negative impact on your credit score.

      It is good that you have a mix of different types of credit, three active tradelines, and are making timely payments. It takes time and a consistent effort to improve your credit score. I believe you will see your score rise, if you keep doing what you are now doing.
      0 Votes

  • 35x35
    Oct, 2011
    Ali
    Hiya, I have few old debts (ranging to a total of 500 dollars). I would like to pay them off, and they are not listed on my credit report anymore. The collection agency has informed me that if I pay those debt. My credit report will be updated by reaging the old accounts. Please advice me how to resolve the situation by paying the colletion agency and not coming on my file as well. Thank you for all your assistance.
    0 Votes

    • 35x35
      Oct, 2011
      Bill
      The collection agent's statement is completely wrong, and, as an added bonus, gives you a strong incentive to not settle the debt. Under the Fair Credit Reporting Act, a federal law, most derogatory entries on a credit report can appear for 7½ years after the date of first delinquency. At the end of 7½ years, the derogatory must be removed regardless of the state statute of limitations, or the consumer settling or not settling the debt. The 7½-year clock does not reset when the consumer makes a payment or settles the debt. You asked how to resolve this situation. If you desire to resolve the debt, explain the FCRA to the collection agent.
      0 Votes

  • 35x35
    Oct, 2011
    JESSICA
    I have just recently paid off some loan companies (that were always paid on time)... will this increase my credit score (my account balance was usually at my high credit limit)?? I had been told that lenders see these loan accounts (from these particular companies) as a "desparation loan". I don't understand why my credit hasn't improved much... I had several credit cards that were settled seven years ago and haven't missed a payment since then on anything else (other than medical that I just found out about).. why does my credit seem to be at a stand still?
    0 Votes

    • 35x35
      Oct, 2011
      Bill
      It is hard for me to make a specific, accurate observation without viewing your credit report. One general comment I can make is that you may not have enough positive information reporting to raise your scores. It is a good idea to have at least three active accounts in good standing. Once you open a credit card account, keep it open. Your score benefits from establishing and maintaining an account for a prolonge period of time. Read about the steps you can take to improve your credit score.
      0 Votes

  • 35x35
    Sep, 2011
    Ashley
    My husband has a judgement on his credit that shows up twice..once it is marked as "paid" and the other one is not. Should he dispute it to get it off, or pay it? We are trying to buy a house and cannot get a VA loan with it on there...but will it hurt his credit if it gets dismissed or if he pays it?
    0 Votes

    • 35x35
      Oct, 2011
      Bill
      I recommend disputing the inaccurate double-listing of the judgment. Also, be prepared to show the loan underwriter that the judgment has been paid/satisfied.
      0 Votes

  • 35x35
    Sep, 2011
    Sandy
    I have been trying clean up my credit. One of my old creditors just sold it to a collection agency. This acccount is due to fall off in 2 years. I am upset this appeared on my credit because this is an old debt and now it shows up new again with the collection agency. Dropping my score 80 points i just worked so hard to get it up. Should I pay it?
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      Paying a debt alone does not undo the damage caused when the debt was reported as delinquent. All you can do is wait for it drop off your credit report and focus on other steps that will improve your score.
      0 Votes

  • 35x35
    Sep, 2011
    lila
    scores 569, 593, 582 I have a bankruptcy that will fall off in 2013. I have 4 student loans all in deferred in school status, I have 16 accounts bewteen the 3 credit bureaus in colletions newest is 1/11 in settlement with CA, and oldest is 2006. I have one credit card in good status. My question is will it raise my score if i settle the collections or try to have these deleted leaving the student loans and 1 good credit card. What would be my best approach to raise my score at least 40 points? Thanks LM
    1 Votes

    • 35x35
      Sep, 2011
      Bill
      Settling the accounts alone will not undo the damage caused by the delinquencies. Settle the accounts, then try to dispute them. Better, negotiate a pay for delete.

      Pay the open account consistently and on time, and keep your credit utilization low. Consider opening a secured credit card so that you have another strong account pulling your score upwards.
      0 Votes

  • 35x35
    Sep, 2011
    Jay
    I am trying to improve my credit score. I requested my credit report and discovered an old medical collection debt of $176, 4 years old. I just paid it off immediately, thinking that would definitely help my credit. Under the new FICO rules, did i actually HURT my credit?
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      It is possible that your score will drop a bit. Current activity gets more weight than items from four years ago. When you paid off the collection account, there was new activity on a derogatory account, given that account more importance than it had before.

      If you looked at your score before you paid the account, I would be interested to hear back from you, as you monitor the effect on your score, to see if you experience a drop in your score or not.
      0 Votes

  • 35x35
    Aug, 2011
    Sid
    I found a home I am in love with and trying to get a mortgage. To do so, I need to raise my credit score. My 'good' credit is all in good standing and has been for a while. I paid down on my accounts to that magic 30% threshold, paid off two department store cards that the balances were $42 and $56. I had three medical bills in collections for $169, $267 and $94 that I paid off. I am now just sitting and waiting for my credit reports to update. I have called every creditor to see when they will report, and all will do so between Sept. 2 and 19th. When they all update, will I see my score come up? I'm terrified because I keep reading that paying off those medical bills in collections will LOWER my score. There isn't anything else I can do to my reports, I have asked a few places to update their information because doing so would lower my debt ratio, paid off collections, and paid down my other credit accounts (except for my vehicle) to below 30%. I sure hope I see a change in my score so I don't lose the house I want so badly!!!
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      When it comes to the collection accounts, you were damned if you did and damned if you did not. A mortgage underwriter would likely have required you to pay the collection accounts, although tiny ones may have not been an issue.

      Speak to a loan officer about rapid rescoring. That could help you boost your score or at least give you a quicker read on what it is.
      0 Votes

  • 35x35
    Aug, 2011
    Erik
    My fiance and I are trying for a home loan. We have tried once but apparently were denied because of not enough credit, a collection, and a court judgment for an accident that was reported on my credit report. My score is 659 and hers is 630. Now, my fiance is getting a settlement check in the mail from an accident she had a year ago and we want to raise our scores so we can get approved for the house loan. i have a 649$ ambulance bill past due for about 6.1 years and a court judgment which I'm still paying off and is now down to a $2000 balance. My fiance's credit history is excellent, but her balance to limit ratio is high, and shes never missed payments. Now we want to improve our chances on getting a loan for a house, and with a 10,000$ settlement check coming in we want to use some of it to pay off some debt to boost our chances. I figured paying off the court judgment and the collection on mine will help with my score, and paying off my credit cards which are not that much to begin with, something like $200-300 with both of them would help. Now for my fiance, I want to raise her limit while putting some money down towards her debt. So all said and done thinking maybe 4-5000$ to put down on our first house. would doing these things bring our scores up enough and show a better report to get a home? I tried to cosign with her on a mortgage but was denied because of my report and she was denied because of her annual income. I think the minimum credit score for approval for a home is 640 to but I was told by our loan officer that her credit was fine just her annual income was a hard hit. My income was good, but could not get approved because of my credit report and could not be cosigned on the loan.
    0 Votes

    • 35x35
      Aug, 2011
      Bill
      You should use the expertise of a good loan officer to assist you. It sounds like you are close to qualifying, but need to slightly improve your scores.

      A good loan officer will tell you what debts must be paid off, in order to qualify for a loan. My feeling is that you will have to pay the judgment. The ambulance collection may be so old that a lender is not going to require it to be paid off. Don't rush to pay off your credit cards, before you see how much of a down payment you need to buy the home.

      It sounds like her debt-to-income ratio is more of an issue than yours. Asking for higher credit limits for your fiance is a good idea, but so is using some of the settlement funds to pay down her debt, especially if her request for higher limits is rejected.

      An FHA loan requires only a 3.5% down payment, so it is going to be your best option.
      0 Votes

  • 35x35
    Aug, 2011
    Venu
    I have negative mark on my credit report for a medical bill of $100. I called the collections company to ask them if they will drop the record if I pay it off (I am looking for a refi). They say that they will only mark the account as paid ($0 bal.), they can not totally drop the record. Do you have any idea collection account with 0 balance is same as no collections record and will improve my credit score? Thanks..Venu.
    0 Votes

    • 35x35
      Aug, 2011
      Bill
      What you seek is a pay for delete. The creditor can do a pay for delete, and no law prevents it, but chooses not to in your case.

      The credit score damage was done at the time the derogatory was added to your credit report. Paying the derogatory now improves your debt-to-income ratio, but does nothing for your credit score. Only time with positive activity, or a pay for delete can improve your score.
      0 Votes

  • 35x35
    Aug, 2011
    Vie
    Hi, I have some medical bills that has been sent to collections. This bills now may have been in collections for about 3 yrs. Yes of course my credit has drop over the years. I need some assistance, if this doesn't sound like "why now, after so long?" What should I do now and how should I begin to contact the collection agencies? Thank You. Hope you can help.
    0 Votes

    • 35x35
      Aug, 2011
      Bill
      If you are trying to clean up your credit and pay off old debts when the debt collectors are not contacting you, you should start by getting a free copy of your credit report at annualcreditreport.com.

      Look in the back of the report and there should be contact information listed for each of your creditors. You can call them up and try to work out satisfactory payment plans. Be careful; just because you pop up and express a good faith desire to pay your debt does not mean the collector can't aggressively pursue collections at that point.
      0 Votes

  • 35x35
    Jul, 2011
    Rebecca
    Hi. My fiance and I are looking to buy a house soon and my credit is pretty good (in the 720s) and his is good as well (705) but he has one collections action on his credit report from 2009 and he has been getting letters from a collection agency for medical bills accrued from a 2 day hospital stay his son had last summer without insurance (long story short we had an issue with a child health plus agent when we moved counties and she told us his application was in process but then later told us we gave insufficient proof of address). per a child support agreement, his son's mother is supposed to be responsible for half of all medical bills accrued but she is currently incarcerated (answers to these questions may be beyond your area of expertise). anyway, my main question is should he settle the old collections account that is currently on his report and ask for pay for delete and then negotiate a settlement with the hospital collections, and if he negotiates a settlement, will it immediately be reported to the credit bureaus, even though it is not currently appearing on his report? should we try to push for the home loan before he negotiates any settlement with a collections action that is not currently effecting his credit?
    0 Votes

    • 35x35
      Jul, 2011
      Bill
      In large part, the answer to your questions depends on your priorities. If getting the loan is your number one priority and time is of the essence, he should just pay off both accounts.

      You did not specify the size of the debts. Depending on the lender, not every collections account needs to be paid in order to qualify for a loan. The age of the collections account and the size of the debt factor into the equation.

      Requesting a pay for delete is a good idea, but if the creditor balks, you have to decide whether it is more important to have the $0 balance the lender may require or to worry about the history of the account showing on the credit report.

      The hospital may or may not be willing to negotiate a settlement. If he pays the entire debt and his ex has not lived up to her obligations under the divorce decree, then he can take action against her, if he deems it worth the time and expense.
      0 Votes

  • 35x35
    Jul, 2011
    Jane
    My issue is currently with a bill that I never received from an ambulance company that got sent over to collections. This was due to a vehicular accident. I have full coverage from my insurance company and it COULD have been paid but wasn't due to lack of receipt/knowledge regarding the bill. I'm thinking about proposing a pay for deletion to the collections agency. Now my question is, is it still acceptable to have my insurance company make the payment directly to collections after they agree to terms or must I do this out of pocket then have insurance reimburse? And should I include information/details about the lack of receipt mishap in the proposal for pay for deletion?
    0 Votes

    • 35x35
      Jul, 2011
      Bill
      It seems to be a prudent first step to contact your insurance company, to find out whether they will pay the claim directly or if you need to pay it out-of-pocket and then seek reimbursement.

      I think you should include your explanation for how the debt degraded into a collection account, due to your not receiving the bill, when you ask for the pay for delete.
      0 Votes

    • 35x35
      Jul, 2011
      Jane
      My next question is - I see all these red flags for making sure that one does not acknowledge the debt. What exactly does that constitute? If I delve into talking about the process of the debt degrading into a collection account, isn't that considered acknowledging the debt? I'm just unsure of how to draft this proposal with all of these factors included...
      0 Votes

    • 35x35
      Jul, 2011
      Bill
      Acknowledging a debt can be simple or subtle. Including the phrases, "my debt" or "what I owe" or "my account" in your messages can be an acknowledgment.

      Instead, use phrases like, "I would like to resolve account #ABC-123" or "Although I am not acknowledging this account, I would like to discuss a settlement agreement whereby this is paid and removed from my credit report."

      Each state uses a different standard for acknowledgment. Consult with a lawyer in your state who has consumer law experience to learn a precise answer to your question.
      0 Votes

  • 35x35
    Jul, 2011
    Carolina
    I wanted to find out how can I pay my collection debt, I had a few things on my record and I want to be able to fix it because I want to be able to get a good credit for a future
    0 Votes

    • 35x35
      Jul, 2011
      Bill
      That sounds like a great plan, Carolina. The resources I mentioned in the original answer above will provide a great start for you.
      0 Votes

  • 35x35
    Jun, 2011
    Joe
    I have a total of 3 collections accounts, 2 medical collections and 1 revolving account that are currently reporting every month to all 3 CRA.I have 1 mortgage account, 1 auto loan open in Sept 2010, 1 credit card with 320 limit open in August 2010 and a small loan open Aug 2010 and I have not been late on any of these accounts. So, I have 3 collection reporting and 4 good standing accounts being reported every month. But I don't see much increase in my score. It stays around 550 or so. I'm going to pay these accounts at the end of the month. My question is once the collections have been paid and the collections have stopped their monthly reporting,(i know they will remain on the credit report) but will this help my score? I hope within 6 months or so it would increase, because of the other accounts being reported.
    0 Votes

    • 35x35
      Jun, 2011
      Bill
      Paying the collections accounts, so they will show a $0 balance on your credit report, will help you improve your score.
      0 Votes

  • 35x35
    Jun, 2011
    ADAM
    Well I am debt free. Paid all debts, opened a Capital One secured credit card with my bad credit, only took 200 deposit. I just hit my 6 month mark, and my credit limit increased $100 to $300 total. I got my score up to 640. I was was happy. I was showing real progress in rebuilding my credit. I then applied for a small unsecured loan ($500) from my credit union in March. Well even with my capital one account pay history status in good standing/never late, and a new loan, my credit score plummeted to a 583. 57 points. Now for the passed 3 months, with constant, sometimes daily monitoring with truecredit.com, my score is not showing a monthly increase anymore. It has rebounded to 633 on a good month to 625 on a bad month. There have been no negative entries on my TU credit report, yet my score remains the same. I am really starting to think that there needs to be changes to this Fair Issac scoring model, or FICO needs to be eliminated. I personally have seen my score drop for no reason, and wonder if these CRAs really care about us, or are they in with the companies that report to maintain poor credit for customers that already have it to suck more money out of us, in interest. When am I going to start seeing a positive effect again for making my ever-so-important monthly on-time payments? One more thing, as stated above, can I request Capital One to increase my limit a little more. $100 in good, but if I want a better score I need higher limits, right? Would I be out of line to ask for a $500 credit line after they just increased it a 100? When can I expect the next credit limit increase, or when can I request the next one? I checked my credit report, they have not made a hard inquiry to my credit file for the $100 increase. One last question, would they make one if I ask for a credit increase.
    0 Votes

    • 35x35
      Jun, 2011
      Bill
      Increasing your credit limit may have a positive impact on your credit score, as a larger limit will lower your credit utilization ratio. Think diversity, too. One positive credit account (called a tradeline) is good. A separate tradeline (say, an auto loan, department store card, or oil company card) would be better. As I have stated elsewhere on Bills.com, think of your credit score as a diva. You cannot buy a diva a dozen roses to make her happy. You need to do many separate things (have many strong tradelines) consistently to make the diva happy.
      0 Votes

  • 35x35
    Jun, 2011
    Kendal
    I have several accounts in collections, mostly from medical bills that I can't afford to pay off. I am paying off the one revolving account I have in collections this month. However I got a letter from an attorney wanting me to pay the total $3,000 medical bill within 30 days or "be reviewed for the filing of a lawsuit." I'm not sure what this means or how I am supposed to resolve it. I am really trying to improve my credit score to be able to buy a house but I'm overwhelmed by the accounts in collections. Will paying the account in collections help my score? How do I handle the other accounts? (I'm pretty young, 23, so all my accounts are pretty recent, within the past 1-2 years)
    0 Votes

    • 35x35
      Jun, 2011
      Bill
      Resolving (paying the full balance or a mutually agreed upon smaller amount) a delinquent debt will not reverse the damage to a credit score caused by the late payments. Late payments, not the debt itself, causes the damage. Time and the practice of good credit hygiene on other accounts rebuilds a credit score.

      Regarding the remaining delinquent accounts, negotiate a settlement to avoid a lawsuit. If you reach an agreement, make a pay for delete a key point in your negotiations.
      0 Votes

  • 35x35
    Jun, 2011
    carrie
    I currently have an old t-mobile phone bill and the credit agency is hassling me to make a payment. I can make a payment but the bill is from like 4 years ago and I am wondering how I should resolve it. will they report it paid to the credit bureau or will it affect my credit more. How do I handle this? I also have an old power and water bill I want to pay and have the same issues??????? Please help me!
    0 Votes

    • 35x35
      Jun, 2011
      Bill
      First, validate the debt immediately. Debt that cannot be validated cannot be reported on your credit report, nor can it be collected.

      Second, regarding your credit score, the damage is done when a creditor reports the delinquency. Your paying a debt now will have almost no impact on your credit score. The only impact it will have is in your reported debt load, and if the debt is large that may be significant to your debt-to-income ratio.

      Third, regarding the statute of limitations, the applicable statute of limitations is tricky. If the contract you signed has a choice of laws clause stating the parties will use State A's laws, then despite your residing in State B, and the creditor being headquartered in State C, both parties agreed to use State A's laws if a dispute ever arose out of the contract. Complicating this is that some state judges will take pains to ignore choice of laws clauses, and not every contract has one. The default is to use the defendant's state laws, and hence, his or her state statute of limitations. If you are ever sued regarding this debt, consult with a lawyer in your state, and be sure to raise a statute of limitations defense if it applies because a court will not raise it for you.

      Finally, you can negotiate a settlement for the debt. Be sure to ask for a pay for delete.

      Click on the hyperlinks mentioned here to learn more about each issue. Ask any follow-up questions you may have on the appropriate pages.
      0 Votes

  • 35x35
    Apr, 2011
    Lauren
    I am hoping to buy my first new car with a 20% down payment soon! I know my credit is poor with an average 640 score. What should I expect when I approach dealers??
    0 Votes

    • 35x35
      Apr, 2011
      Bill
      I would not describe your credit score as "poor." It is not terrific, and not a number you should reveal in casual conversation at a cocktail party to wow an audience, but it is not an embarrassment, either. If you expect a dealer's finance department to offer you a zero-APR loan, then you are mistaken. On the other hand, a buy-here-pay-here dealer will consider a 640 as the best customer of the day.

      A loan sits on a three-legged stool. One leg is your credit score. The other is your income history. The third is your debt-to-income ratio. You need three strong legs to get a loan. You will find your best deal in a vehicle loan at your credit union or bank. Apply online at your bank or CU to see what APR you qualify for.
      0 Votes

    • 35x35
      Apr, 2011
      Lauren
      Would it be helpful or hurtful to close an old collections account beforehand?? Thanks again!
      0 Votes

    • 35x35
      Apr, 2011
      Bill
      When an account becomes so delinquent that it is charged-off, the original creditor almost certainly closes the account. A consumer cannot close a closed account any more than a person cannot shut a closed door. Closed is closed no matter who closed it.

      You are mistaken if you are hoping that closing an account makes it disappear from a credit report.
      0 Votes

  • 35x35
    Feb, 2011
    Amanda
    I am new to this site but I was reading somewhere that people were using Pay For Delete letters to have delinquencies removed from their credit report after negotiating a settlement and paying it off or paying the full original amount. Do yo know much about these? I would think that this would be more effective as far as raising my credit scores since the entry would be removed versus just paying them and waiting for the delinquency to age and fall off.
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      A pay for delete agreement, in writing, is a very favorable outcome to a debt settlement negotiation. A pay for delete will, as you suggest, provide an immediate boost to your credit score because the derogatory account will disappear from your credit report.
      0 Votes

    • 35x35
      Feb, 2011
      Rachel
      When the collection agencies delete the accounts, approx. how much will it boost your credit score? I just paid off 6 medical accounts that went into collections (3 collection agencies). The bills totaled $1400. All 3 agencies agreed to report them to the bureaus and have them deleted. How much should this boost my score?
      0 Votes

    • 35x35
      Feb, 2011
      Bill
      Impossible to say. There are several variables in play here. The lower your score is now, the higher it will rise when the accounts in question are deleted. Are you otherwise practicing good credit hygiene by paying your other trade-lines consistently? Do you have a variety of other trade-lines? Do you have a current trade-line with a long history? If your answers to these questions are yes, and you have no other delinquent accounts, then your score will see a significant rise.

      To learn more, read the Bills.com resources understanding your credit score and how to improve your credit score.
      0 Votes

    • 35x35
      Apr, 2011
      Joe
      I just settled a debt with a pay for delete...whats the "average" number of points a credit score can go up once the collection is removed from my credit report.
      0 Votes

    • 35x35
      Apr, 2011
      Bill
      The answer to your question depends on where your credit score is now, how long it has been there, the number of other derogatory accounts appear on your credit report, the amount of positive activity you are engaging in right now to boost your credit score, and so on. If this is one blip on an otherwise strong report, the effects will be immediate and great — 50 points or more. If this is one positive action in a sea of derogatory entries, do not expect any noticeable change.
      0 Votes

  • 35x35
    Jan, 2011
    Adilene
    Hello Bill, I have accounts in collections that impact my credit score pretty high, I have every intention to pay everything off. My question is should I do payments or try to pay the whole amount, what would make my score rise? And also establishing new credit, would that be hard since I have super bad credit? Thanks.
    0 Votes

    • 35x35
      Jan, 2011
      Bill
      If you have the ability to pay off your accounts now, then you can start the process of building your score sooner. If you have to make payments on the collections accounts, then it will take longer to raise your score. Given that you describe your own credit as 'super bad,' I suggest that you follow the advice I gave about improving your credit score when you have bad credit. Please post any follow-up questions you have on that page.
      0 Votes

  • 35x35
    Dec, 2010
    Tyler
    Hello. I have been unemployed for almost a year to the day. I currently have 5 accounts in collections. What would the affects on my credit report and score be if I eventually paid off all of them in full or made payments on them until fully paid off as opposed to "settling" or negotiating with them to agree to pay a percentage of the amount owed? I eventually want to get a different car and possibly a new home once I become employed again. How would banks/lenders look at my report when seeing "collection paid" or "paid in full" as opposed to "settled"? Thank you in advance for any information that you can provide
    0 Votes

    • 35x35
      Dec, 2010
      Bill
      In my observation, the notation is largely irrelevant to a credit score. The delinquent payment causes the score damage. As you suggest, however, if you can point out to the underwriter that the balance was fully paid, that may tip you over the edge into the "yes, we'll give you a loan" zone. However, that is purely speculation on both of our parts. If the underwriter is looking at your numbers only, then your arguments will fall on deaf ears.
      0 Votes

  • 35x35
    Nov, 2010
    john
    I have a couple of old positive accounts from my college days when credit card offers came with a free t-shirt. I only wanted the free t-shirt so I closed some of these cards before ever using them. They are still on my credit report as non-negative items. They don't contain payment history or credit limit, true-credit.com, says that I am losing points because these accounts don't contain enough information. If I remove these old accounts (from 01-02) how will it effect my score? Or should I just try and get the extra info added in? Thanks
    0 Votes

    • 35x35
      Nov, 2010
      Bill
      The harm to your credit score from the closed free t-shirt credit cards should be minimal. One tactic is to dispute the entries and cross your fingers that the credit card issuers do not respond to the challenge, thus obligating the credit reporting agencies to remove the entries. Another, more fruitful tactic is to create positive history on your credit report by paying the open accounts you have promptly, and opening a variety of accounts with retailers and paying those accounts promptly
      0 Votes

  • 35x35
    Oct, 2010
    Bill
    Read the Bills.com resource Improve My Credit Score to see steps you can take to boost your credit score. This also discusses, briefly, a tactic for repaying your debts. See also Debt Relief Options: Which is Right for You? to understand the choices available to you.
    0 Votes

  • 35x35
    Oct, 2010
    j.
    I just looked through my credit report, and have a considerable amount of bills in collections. My credit is so bad that I can only get secured credit cards. I want to improve my credit score, but I cannot afford to pay the most outstanding, larger amounts that are in collections. If I were to pay, say, $50/month on each outstanding balance, will that make a difference. Or would it make more sense to wait to win the lottery and pay it all at once? please help! I am 27, and would really like to take care of this within the next couple of years. I am not looking to make any major purchases, but I just want good credit. Thank you in advance.
    0 Votes

  • 35x35
    Sep, 2010
    Dean
    I have also been trying to repair my credit and am now finding out it is impossible to do. collection agencys don't follow any laws. and dealing with credit reporting agencys is impossible. So called EXPERTS on credit repair say "they must do this or they must do that" sounds good but it does'nt work. if you truly want to correct errors on your credit file be prepared to spend thousands of dollars for a good Attorney. zombie debt collectors can get your personal information and attach anyones debt to your name and say you owe it. I have been told by one collection agency (after writing them a certified letter (return reciect required). that i must prove to them that i don't owe it. So in closing good luck to everyone fighting collections and credit reporting agencys. just wait 10 to fifteen years and your score will improve.
    0 Votes

  • 35x35
    Sep, 2010
    Bill
    Paying off old debt should raise your credit score. How much of an effect it will have on your score depends on the number of collection accounts you are paying off, how old the accounts are, and what other information is on your credit report. Paying off an old collection account should result in the account showing 'paid as agreed' or 'paid in full.' Showing that the account is paid off is as positive a listing as you can expect.
    0 Votes

  • 35x35
    Sep, 2010
    LEE
    I would like to know, if you have collection accounts that have been paid in full, does it raise your FICOscore at all? And does these collection account ever go to positive status? If so how long?
    0 Votes

  • 35x35
    Jul, 2010
    Bill
    Positive! A pay for delete quite a coup, and will result in a lift in your credit score when the derogatory history for those accounts are removed.
    0 Votes

  • 35x35
    Jul, 2010
    Nakeia
    I have a few collection accounts and have set up payment for them . A few of the agencies have agreed to totally remove the account from my credit report. Will the removal positively or negatively impact my credit score?
    0 Votes

  • 35x35
    May, 2010
    Bill
    It is relatively easy to find a vehicle loan at a "buy here pay here" type of used card dealership. However, the interest rates are high, the quality of the vehicles sold is not the best, and the collections practices of "buy here pay here" dealers are quick, relentless, and heartless. Credit score is also only one piece of the puzzle. What is your income? What are your other debts?
    0 Votes

  • 35x35
    May, 2010
    lauren
    lost job and a credit card went to collections. i am on a 6 month payment plan with the collections agency. to get a car loan does this need to be paid off? or can i get a car loan- but just with a bad credit score?
    0 Votes

  • 35x35
    Apr, 2010
    Bill
    See my answer to Monica above dated March 12, 2010 for an answer to your question.
    0 Votes

  • 35x35
    Apr, 2010
    JR
    How much can paying off old accounts raise my score?
    0 Votes

  • 35x35
    Mar, 2010
    Bill
    There is no short answer to your question because it depends on the starting point for your low score, how many tradelines you have opened recently, and your repayment history with each. There is no "If you do this one thing, your score will increase X points automatically" because of the number of variables that go into forming a credit score. See the Bills.com article FICO Score Calculation to learn more.
    0 Votes

  • 35x35
    Mar, 2010
    Monica
    How long does it take for your credit score to change when you pay your bills on time but have bad credit.
    0 Votes

  • 35x35
    Jan, 2010
    Bill
    Short answer: 2011.

    Long answer: The seven year time limit is set by US federal law, namely the Fair Credit Reporting Act (FCRA). The seven year time limit starts approximately 180 days after the date of first delinquency on the account. To learn when an account will be removed by TransUnion, Equifax, and Experian, add 7.5 years to the date of first delinquency. Subsequent activity, such as resolving the debt, is irrelevant to the seven-year rule.
    0 Votes

  • 35x35
    Jan, 2010
    Frank
    I have an old collection. My report says the date assigned is in 2004. I paid it in 2009. My report still says the date assigned is in 2004, but it also says the date paid, reported, and closed are in 2009. Will this incredibly annoying collection be on my report until 2011, or because I paid it until 2016 now?
    0 Votes

  • 35x35
    Oct, 2009
    Bill
    Be extremely careful that when you submit the payment that the memo portion of your check references the 2007 account number, and if there is a payment book or payment slip you use the payment slip for the 2007 account. Remember that unscrupulous debt collectors are apt to do anything to gain leverage on a debtor, and that you should be careful to document all of your payments carefully.
    0 Votes

  • 35x35
    Oct, 2009
    Stephanie
    I have a couple collections through the same company. One of them is almost 7 years old and the other two are from 2007. If I pay the two off from 2007, can they reopen the older one that is getting ready to come off of my report anyway?
    0 Votes

  • 35x35
    Oct, 2009
    Bill
    It appears that you need to work a bit to improve your credit scores. The good news is that if you are debt-free, all of the hard work is behind you. To learn more about how your credit score is calculated and what you can do to improve your score, see FICO Score Calculation.
    0 Votes

  • 35x35
    Oct, 2009
    Carolyn
    Due to a divorce in 2001 and no money I had some collections on my credit report, All three of my Fico scores are below six hundered. I since then paid off all my collection in full has no debt will I ever be able to buy a house? If so how long will I have to wait? how high will my score must be?
    0 Votes

  • 35x35
    Jun, 2009
    Bill
    It's hard to say, but you should continue to diligently monitor your credit reports and keep making your monthly payments on time. As time passes, your score should start to improve.
    0 Votes

  • 35x35
    Jun, 2009
    MR
    I had a collection from a 3rd-party medical provider who did tests on a tissue sample after a surgery I had in October, 2004. Long story short, I moved 3x in the next 4 months and never saw a bill, and I hadn't expected to receive one. I never knew that I owed them any money until the account was sent to collection and it showed up on my credit report in 2005. I immediately paid it off. As a result, my credit score (Equifax) dropped from 806 to just under 700, where it has stayed ever since. It seems to me that a 100+ point drop for a $174 medical bill is severe, especially since it's been 4+ years since I settled it. Fortunately, it has not stopped me from getting car or home loans but it pisses me off. Is it going to stay this way til 2012?
    2 Votes

  • 35x35
    Jun, 2009
    Mark
    I will infer from your phrasing "are settling" to mean that you are in negotiations with creditors to settle old debts. If so, make a point to ask them to not report the debt or settlement to the credit bureaus. If they insist on reporting it, then make your fallback position that they report it as paid in full. If they don't budge on that either and insist on reporting it as settled, that's not necessarily terrible for your FICO score because scores are weighted for recent activity, and not old debt. Negotiations usually happen with the spoken word, but what the creditor or collection agent puts on paper is what matters. Get every promise in writing before sending your payment.
    0 Votes

  • 35x35
    Jun, 2009
    Denise
    Hi...I am going to settle an old debt which is not currently being reported by any of the major credit agencies. I am concerned if I settle the debt, the collection agency will report it on a credit bureau as being settled. (Of course, I don't want it to appear at all.) I am actually settling a few debts that don't currently appear. What is the best way to ensure that settling a debt doesn't show up on a report and affect my credit negatively? Thanks!
    0 Votes

  • 35x35
    Jun, 2009
    Bill
    It is always best to resolve old debts, you never know when they will come back to haunt you.
    0 Votes

    • 35x35
      Aug, 2011
      Jerry
      You keep saying this, and morally you are right. Legally, however, you actually DO know when old debts will STOP coming back to haunt you. Every state has statutes of limitations which prevent anyone - the original creditor, collection agents, etc. - from suing you to collect on a debt after a certain amount of time has passed. This is true even for signed promissory notes. Usually this time frame is between 3 and 6 years (which is probably part of the reason credit reporting agencies stop reporting on bad debts over 7 years old - there is no legal recourse to collect on debts after that much time has passed). So, if your conscience can handle it, if a creditor hasn't sued you within 3-7 years to collect a debt, you can safely consider that debt a thing of the past. And, since most creditors will have sold the debt to a collection agency by then, there is really no way to repay the original debt anyway - no matter how much you may want to do so.
      0 Votes

    • 35x35
      Aug, 2011
      Bill
      Your central thesis is incorrect. Once a debt has passed a state statute of limitations, a creditor (be that the original creditor or a collection agent) can file a lawsuit against a debtor, except in Wisconsin. If the debtor presents the affirmative defense of the passage of the statute of limitations, and if the court agrees with this defense, then the court will dismiss the case.

      If defending one's self against a lawsuit is so easy with a statute of limitations issue, then why do so many creditors file lawsuits on post-statute-of-limitations cases? Because many consumers do not understand their rights, and allow a default judgment to occur. Courts do not raise statutes of limitations defenses for defendants — the defendant must raise their own defenses.

      Also, which state's statutes of limitations applies to a given situation may be unclear. For example, a consumer in State A may enter into a contract with a creditor in State B where the parties agree to use State B's laws. In this situation, State B's statute of limitations may apply.

      You stated "...if a creditor hasn't sued you within 3-7 years to collect a debt, you can safely consider that debt a thing of the past." This is a false and dangerous statement. Almost all states have statutes of limitations on written contracts and promissory notes that are greater than three years, and some are longer than seven years. For example, you indicated you reside in Alabama. The statute of limitations on Alabama written contracts is either six or 10 years depending on the circumstances.
      0 Votes

    • 35x35
      Aug, 2011
      Jerry
      It's not a "false" statement as you claim - it's simply not absolutely true in every conceivable situation. Which is where the "dangerous" part comes in. I probably should have said that after the statute of limitations has passed you can probably consider a debt to be a thing of the past. I specifically stated a range of time periods (i.e. 3-7 years) rather than any specific statute of limitations precisely because these laws vary from state to state and among differnt types of contracts. However, few states (if any) have statutes of limitations on written contracts which exceed 7 years. Unless you can cite otherwise. . . My "central thesis," however, and as you apparently agree, remains true. You can (and should) be able to know when an old debt will no longer be able to come back to haunt you. There is a vital social policy reason for this; you don't want people or businesses operating in fear that some long-forgotten debt will jump up and bite them in the arse.
      0 Votes

  • 35x35
    Jun, 2009
    marie
    I checked my annual credit report it states that i have an old bill and it will be removed next month. Should i pay the bill or wait for it to be removed and if pay the bill will my credit score will go up or wait for it to be removed next month
    0 Votes

  • 35x35
    Apr, 2009
    Bill
    It is always better to resolve these old accounts, you never know when they will come back to haunt you.
    0 Votes

  • 35x35
    Apr, 2009
    Susan
    I have an old utility bill on my credit an ex roomie stuck me with an a credit card that I could not afford to make payments on when was unemployed for 8 months to have my baby during a high-risk pregnancy. I want to move into a nicer apartment with my new little one. For these two bills that appear on my credit should I pay them off in full to show the apartments I pay my bills or just see if I can do a bigger deposit to save my money?
    0 Votes

    • 35x35
      Jun, 2011
      Chasity
      If you are going to move into a new apartment, I would pay off that utility bill that is in collections. From experience, landlords look at your credit report to see if you old utility bills you havent paid.
      0 Votes

  • 35x35
    Mar, 2009
    Bill
    With the changes in the bankruptcy law, not everyone can file for Chapter 7 (which would wipe out all your debts). If you earn an income, you will probably qualify for a chapter 13, which is basically a court structured repayment plan, but still looks bad. Bankruptcy is a serious issue and should only be considered after you have consulted with a bankruptcy attorney. A better plan for you would be to take stock of all of your overdue accounts and start to pay them off one by one. There is not much you can do about judgments that have already passed, but you can still negotiate lower settlements on the other accounts. Once your done paying these accounts, you can open one or two other lines of credit to re-establish your credit. For more help with rebuilding your credit, please read though the credit resources section on our website at http://www.bills.com/credit/.
    0 Votes

    • 35x35
      Jun, 2011
      Jamie
      To file a Chapter 7 Bankruptcy, you can have income. But, there are rules as to how much income you can have. These are different for each state. As long as you fall under the income guidelines for a Chapter 7 or Chapter 13 Bankruptcy, you can file. It's not whether or not you have income, it's how much income you have.
      0 Votes

  • 35x35
    Mar, 2009
    Brandy
    I have a judgement that attempted to garnish my bank account I also have some other accounts that were sent to collections on my credit report. Some debts are old and some are recent. I want to rebuild my credit really bad. Should I file bankrupt to get a fresh start?
    0 Votes

  • 35x35
    Mar, 2009
    Bill
    Be careful, if anyone will send the summons, it will be the court where the hearing will be held. The credit card company will request the court to send the summons to the last know address on file. Not receiving the summons because you changed your address is not an excuse you can fall behind. In case you get the summons and do not appear, a default judgment will be passed against you, you should never let this happen. Yes, they can still proceed with the court case, even after you make a payment. The only reason they will stop, is if you pay the total amount due.
    0 Votes

  • 35x35
    Mar, 2009
    Yolanda
    I am being sued by a collection agency for a past due credit account. However, I have not yet received the warrant to go to court because I am no longer at the address where they'd tried to serve the court papers. If I send in a payment(not for the full amount), are they still entitled to serve me those papers and take me to court?
    0 Votes

  • 35x35
    Feb, 2009
    Bill
    Closing accounts that have had a long payment history and have helped you establish your credit, might cause a slight lowering of your credit but nothing substantial. There is no way to get the accounts removed from your credit report unless there are some entries that have some errors.
    0 Votes

  • 35x35
    Feb, 2009
    Bill
    All accounts remain on your credit report for up to 7 years. paying off a collection account will help improve your score not lower it.
    0 Votes

    • 35x35
      Jan, 2011
      Jennifer
      That is not true. It initially lowers your score because the recent update to your status of, "Paid collection" from just, "Collection" causes the account to, once again, become more relevant. Collections and charge offs hurt your score less as time passes. Updating the status "renews" the account. Instead of showing a date of six months to several years ago, the date becomes current and therefor the negative impact becomes more relevant again. I know from recent experience. My question is, how long does it take for an account to start losing that relevance again? If all bills are continued to be paid on time, and there are no other negative additions, how long before the score starts to climb, again?
      0 Votes

    • 35x35
      Jan, 2011
      Bill
      You are correct, Jennifer. It can be the case that paying an old collection account can initially lower your score, because an account that was not getting much weight in your credit score is given greater weight due to recent activity. In regards to your question about how long it will take for your score to start rising, it depends on your credit profile. For example, if you have a mortgage payment, a car payment, three credit card accounts, and a student loan that show on your report as all in good standing, your score will rise more rapidly than if you only have two credit cards in good standing. Maybe you can check your score now, monitor how fast it rises, and share that information with the bills.com community? We would be interested in hearing how things develop for you as well as how many points your score dropped, after you paid the old collection accounts. If you can include a summary of the kind of accounts that appear on your report, that would be helpful.
      0 Votes

    • 35x35
      Jul, 2011
      Linzy
      Glad I came across this article! Question I have; there are 3 collectors on my credit report that state they are closed. It also says in the 24 month history that they have been reporting. I am confused to this, and to what significance should I make an attempt to pay these off? My credit score is mid 500's and I have no debt, aside from these, no cc's, really nothing at all. I want to improve my score and know it won't happen over night, but would paying these make any difference?
      0 Votes

    • 35x35
      Jul, 2011
      Bill
      Your question touches on an item of minor controversy among the staff at Bills.com. One group takes the position that paying long-delinquent debts will result in an improvement to a consumer's credit score because of the change in status of the delinquent accounts. Another group maintains that the change in status makes no difference to the credit score, but paying the debts may increase the available credit ratio, especially if the balances are large, which will result in a credit score improvement. Which group is right is knowable only to the mathematicians at Fair Isaac & Co., Vantage Score, and PLUS Score.

      Settling old debts is never a bad idea.
      0 Votes

    • 35x35
      Jul, 2011
      rodney
      I had a credit score of 465 across the board, started rebuilding my credit 14 months ago i still have the 2 derogatory on each credit report, but my scores are 701-eq, 709-exp, 705-trans, I currently have a Discover, three capital one credit cards, Orchard, Primer, Old Navy, Chevron, WalMart, Firestone, etc., a total of 11 credit cards. I'm still building. My low score was the result of credit card fraud. I've disputed until I'm sick of it but I never gave up. I have removed 14 items off my credit report, by myself, but I have came a long way in 14 months. Good luck to you all.
      0 Votes

  • 35x35
    Feb, 2009
    danelle
    I have several paid off and closed accounts that I still see on my credit report. Are these items lowering my score? If so, how can I get them removed?
    0 Votes

  • 35x35
    Feb, 2009
    Danelle
    I have paid off collections and closed accounts on my report. Do these lower my score? How long will they be on there if so?
    0 Votes

  • 35x35
    Nov, 2008
    Bill
    That really depends on how you negotiate with them. You have to insist that once paid, they report the debt as paid in full with a zero balance. Since this is a past due bill, the fact that it will show "settled" will have minimal negative effects on your profile as a whole. Make sure you get the settlement agreement in writing before you make the payment.
    0 Votes

  • 35x35
    Nov, 2008
    Grace
    When paying off a collection agency, does it matter whether you pay the full amount or the offered settlement? I have a bill with Verizon that was for $330 and the settlement amount for $165. When I spoke with the collection agent she said that it would be better for me to pay the full amount, otherwise it would showed "settled" on my credit report and could effect it. Thank you, Grace
    0 Votes