phnxangell

If you wait and don't pay them off, they still may be able to come after you. If then, at some point in the future, you need to pay them off for some reason, they can show back up on your credit report because there was a 'change of state' with those debts, and they now reported. Even though paid off, it is still a derogatory account, and will pull down your score.

Need to decide if the risk of not having to pay them off someday is worth the potential credit score hit later, or if just settling now and getting the damage to your credit score in now and let it defuse over time as it falls off later (if you settle, the change of state could restart the clock, so it would be there for another 7 years)

You can update your score once per day. The site does not automatically do it for you.

Select the link to update now when you log in and look at your credit score.

Paying the settlement is worse for your short-term score, but better for your long-term score.

The account is a problem account as long as it is there. It is listed in collections, and as such, is derogatory. As it is an active derogatory, the clock has not started ticking for when it can fall off the report.

By making payments, and if the creditor reports them (may not have to for an account in collections, only may be required to adjust outstanding balance), it helps your score.

But, the fact that it is a derogatory account that is still opened hurts more than the positive on the payments.

If you settle, you take a ding for it being settled now; however, the clock now starts for it becoming old data and to fall off the report completely in 7 years. And, as time progresses, even with it on your report, because it is closed and no longer being reported on, it has less and less impact on your score, and your score will improve faster over time than making payments.

Each credit card reports its balance for your card once per month. The key is figuring out when that is reported each month, and that is when you want to make sure card is a little utilized, but not extensively utilized (e.g. < 30%).

You can pay your credit card off every month. Just have a little balance when it is reported.