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Posted in Credit Scores
If I pay off a collection account will my credit score improve?
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Question By
itsyorkie

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Most Helpful Response
Rick
Helpful to 252 out of 265 people

Here is something that might have been mentioned.

Get in writing that your account will be either deleted, or marked "paid in full" before you send in a payment.

(DO NOT GIVE VIRBALLY, OR WRITTEN ANY PROMISE, OR NOTICE THAT YOU WILL PAY, OR AGREE THAT YOU OWE ANY MONIES).

Doing this COULD refresh the statue of limitations on the account, and could open the door for them to sue you in court.

Use your words wisely and remember you are being recorded. You could tell them, "I don't plan on paying the bill at this momenent. However, if you send me a company letter

head letter stating a payoff and a promise from you to remove, or report the item as Paid In Full. I will keep it for my records, and we can go from there"

This is touchy. Because any promises, virbal or written can really hurt you. BE CAREFUL.

Once this is done, and you have paid the amount wait about 90days and log on the credit agency's websites and dispute the paid items as not being your accounts.

The agency will send the creditor a notice about the dispute.

2 things will happen.

1. They will check their records and update it as paid in full.

2. They will check their records, see it's been paid and ignore the notice.

The 2nd is what you are trying to achieve. Once they fail to respond, the agency is forced to remove it.

If they do 1. then wait another 30-60 days and do it again.

People get confused, and a old account they don't remember can sometimes get mixed up with one that was theirs.

Just remember, when you talk to the collection agents, be respectful, because they hold your credit in their hands at this point.

Response by
mrrickf

2 Contributions
252 People Helped
Helpful to 7 out of 10 people

I'm having an issue where the collections company is stating that they will not send out a letter stating their actions once the dent has been paid  because it is against their company policy because they are not obligated to send such a letter according to the law.

If they won't send the letter, and I won't make a payment or even the promise of one, do I just keep this account in collection status on my report until it drops off after 7 years? 

I'm also thinking of bypassing the collections company altogether and paying the original party but I'm not sure what that would do.

Reply by
ItsBenBroughton

1 Contribution
7 People Helped
Helpful to 7 out of 10 people

This seems like GREAT advice! Do you know if it effects my credit differently if it's marked as paid or removed completely?

Reply by
stephdalessio

1 Contribution
7 People Helped
Helpful to 63 out of 67 people

The problem is getting the collection agency to submit a letter on company letterhead that the debt is paid in full and all obligations have been met. Then the next problem is getting the reporting agencies - Equifax, Experian and TransUnion - to remove it from your records. The last two are more agreeable to making changes, but Equifax starts with the premise that "civilians" are liars. They only accept creditor documents to remove something from your records, though they will allow a consumer statement to explain your position. (Yeah, that will do a lot.)

Top Contributor

Response by
kjeroh

22 Contributions
112 People Helped
Helpful to 34 out of 38 people

Unfortunately, I'd have to agree that Equifax is a hard case.  I had a situation where I had a missed CC payment.  It was turned over to collections. The bank that originally sent it to collections got bought out by a larger bank.   In the mean time, I had paid off the debt.  However, the original bank turned over records to the larger bank showing that I still owed the debt.  This happened two more times within the space of 2 years while I was trying to correct the problem with the credit reporting agencies.  Each bank reported it as a delinquent account that had been turned over to collections.  And each time one bank took over the other, they closed that account and opened a new one under the new bank's name.  This had the effect of "restarting" the 7 year period that negative reports stay on your credit report.

I sent countless copies of the statements, receipts, bills, etc. to each new bank and filed a report with the credit bureaus.  The credit reporting bureaus then had to "verify" the information with the previous bank which was no longer in existence.   So the Catch-22 continued indefinitely until one bank held on to the account for a few years and it finally disappeared.

Reply by
Tashinawin

6 Contributions
80 People Helped
Helpful to 20 out of 22 people

If the bank was no longer in existance, They couldnt verify, and ANY info they cant verify gets the AXE. Those should be deleted

Reply by
jesse3445

2 Contributions
20 People Helped
Helpful to 1 out of 1 people

I haven't had ANY negative experience with the credit agencies and I've disputed my report 4 times since Nov.2011 and today. As for the collection agencies when I paid them I had a letter stating they would accept a payment of "x" dollars as payment in full and agree to mark the record as "paid in full," I paid with a check or CC so I have a record of the exact payment for "x" amount. I put the letter with proof of payment and submitted it as a dispute and the agencies updated the accounts accordingly all within 30 days. Equifax is the easiest to deal with because a lot of stuff reported on TransUnion and Experian weren't even reported on Equifax, and Equifax showed items "paid" that weren't actually paid. I even attempted to use my Equifax report to dispute the other two unsuccessfully. 

Bashing the agencies isn't helpful. Especially if you know your credit is jacked up by your own hand (and not identity theft for instance). They've all responded in a timely and fair fashion. That's been my experience. 

Reply by
justd80010

5 Contributions
2 People Helped

Whoa, that is harsh. Sorry about that experience :(

Reply by
briankeys

2 Contributions
0 People Helped
Helpful to 23 out of 23 people

In an attempt to raise my credit score I got a copy of  all of my credit reports and paid off all of my collection accounts within a month. There was like 6 of them. After a month they were all reported to the bureaus as "Paid" or having a Zero balance but they are still under the "Potentially Negative" catagory on my report. My score did not change one bit even though I technically owe nothing to creditors. I am beyond annoyed by this. Now I am starting to hear from people, including financial advisors, that it is better to just leave them be and not pay them. Once they reach collection status they will be negative no matter if you pay them or not. And if you DO pay them, like I did, you reopen the account so it stays on your report for seven years from the day they are paid rather than 7 years from when they were first reported. So i screwed myself by doing the right thing.

 I was advised to open a secured credit card, which I have done through Capital One, and my score should improve if I keep the balance below 30% of my limit.

It's a shady world out there people. Good Luck!

Response by
cwop123

3 Contributions
23 People Helped
Helpful to 26 out of 27 people

I gota tell ya it's tricky with collections.  I however, did not have the money to pay my collections on my credit  report and had to let them run their course so to speak.  Well, I am here to tell you that when anyone tells you that you should let them ride their course,  DO IT.  I tried what you did several years ago with the same results.  So here is the crux of the matter:  I found that paying them off makes your credit   WORSE.    Leaving them ride out the seven years makes your credit BETTER.  I too have just got a secured cc and I have had it for 3 months.  I had checked my score on here about a month ago and there was no change.  Today it has increased by about 100 points.  So ty secured cc for making my credit better and I hope this helps you

Reply by
lizzy525

2 Contributions
26 People Helped
in regards to collection agencies
Helpful to 35 out of 37 people

has anyone of you tried to do a DV letter to the collection agencies for those who do not know a DV letter means DEBT VERIFICATION   if you go online and punch in debt verification letter sample a bunch will pop up that you can download and then you can tweak it to your desired situation and they do work more times than none the debt has been passed around so much that paper work gets lost or not sent correctly and the collection agency cant prove that you even owe the debt if they cant prove its yours you dont pay it and they cannot report it to the credit bureaus even if it is your debt 

Response by
dennydd

4 Contributions
44 People Helped
Helpful to 53 out of 54 people

YES, YES, YES!!!! This is how I fixed my credit. And actually it is called a debt validation letter. I got mine from the FTC website. A lot of these collection agencies have no information on you just a print out. They can't validate it so they have to remove it. Read the info on the FDCPA fair debt collection practices act. 

Reply by
krazzyluv

9 Contributions
66 People Helped
Helpful to 3 out of 4 people

I have more than a couple collection accounts from 2009 I know they were old debts that were sold I just read where they are not suppose to keep it on your credit report more than 7 yrs. I did not do anything about it thought if they resold it it just keeps going.  I mised a couple payments with cap 1.  Of course they sprinted to the bureaus and turned it in.  I did settle with collection agency,  did not know of the delete option.  But this agency reported it as paid in full acct satisfactory.  Thank god.  my sore has gone up about 6 points but I think it is from lowering my utilization. 

Reply by
pitsy088

9 Contributions
15 People Helped
Helpful to 37 out of 40 people

Yes your score will improve once it's paid off. Make sure you ask for pay to delete option. It is always good to negotiate the amount with them and ask for paid in full letter as a proof that it has been paid in full. 1 collection account will increase up too 30 points on your credit report. It takes almost 30 days to update. If you settle the amount less then what you owed it will still impact on your report as negative. You can always dispute the amount with credit agency and have them update the record with in 30 days. Hope it helps. 

Response by
imrannaim

8 Contributions
52 People Helped
Helpful to 3 out of 5 people

I paid off some old medical bills which were in collections last year. My credit report (Equifax) shows them as having a 0 balance/paid, but they are still having a negative impact on my credit. I didn't know I should have a letter from the collection agency for my protection at the time....how can I get this to stop negatively impacting my credit??

Reply by
lmj1968

5 Contributions
24 People Helped
Helpful to 39 out of 43 people

YES YOUR SCORE WILL INCREASE IF YOU HAVE THE COLLECTION AGENCY AGREE IN WRITING THAT THEY WILL DELETE THE INFOMATION FROM YOUR CREDIT REPORT.A "PAID COLLECTION" REMAKE IN YOUR CREDIT REPORT STATEMENT CAN SOMETIMES STILL BE A NEGATIVE.

Response by
freedom219

5 Contributions
39 People Helped
Helpful to 33 out of 36 people

this is correct. i paid off several collection accounts and failed to get them to agree to delete the info. i disputed and only one of them deleted the info. it still showes negative. how ever my score has increased 40 points since, about three months ago

Reply by
waylonwilliams

1 Contribution
33 People Helped
Helpful to 11 out of 13 people

Agree with this statement as well along with the keywords "in writing"...that's the only thing I see that can save your rep and maintain your score or help improve it...good info..thank you..

Reply by
Only1Ghiwawa

2 Contributions
11 People Helped

That is so unfair, if your going to pay back an old debt, it should be a positive.  But everytime I made a payment to a collection they turned in the payment but it shows up as a negative on the original debt.  I did not know that.  Everyone should read everything to educate themselves about credit repair.  Because as we who are building know,  even a few points the wrong way are So Dissapointing.  Thanks for all the great advice guys!!!

Reply by
pitsy088

9 Contributions
15 People Helped
Helpful to 0 out of 1 people

This is worth a shot, I tried it. I've never written so many letters in my life. But not a single collection agency agreed to delete the debt but one, NCO. All the others agreed to settle and mark the account "paid in full." 

Reply by
justd80010

5 Contributions
2 People Helped
Helpful to 0 out of 1 people

Would you write a letter and have them sign it to remove the collection? How can you really go about getting everything clear?

Reply by
Kfarrington05

1 Contribution
0 People Helped
Helpful to 8 out of 8 people

I had a old medical bill that was turned over for collection. It was 250.00 . It shows up as 4 or 5 different billings on credit report. It has been paid off for months and still reflects on my credit as 4 bad debts. The companies and /or bureaus refuse to remedy the report. I'd say that whether ya pay or don't pay makes them no difference. Not fair , but true.

Response by
MrsGray

1 Contribution
8 People Helped
Helpful to 4 out of 4 people

I t should show paid at least. I would dispute it with the credit bureaus and let them resolve it.

Reply by
amoura1997

1 Contribution
4 People Helped
Helpful to 7 out of 8 people

I had a similar problem where the same account was showing multiple times.  I called up the credit bureau and asked them why 3 or 4 hits were there for it rather than just 1.  They said it should only be the original account's and the current loan holder's.  They then sent a dispute to both the collection agencies to insure that only the current one was marking the account.

Reply by
gnilbeforeme

1 Contribution
7 People Helped
Helpful to 3 out of 5 people

I am assuming you sent a check to the collection agency. If so, why don't you fax a copy of the cashed check and/or bank records to the credit bureaus?

Reply by
moakes

7 Contributions
3 People Helped

Lol no i didn't i just spelled it wrong.

Reply by
Taraswank

2 Contributions
0 People Helped

If the account is close to the drop-dead date then there is probably no reason to pay it as it will remain on your report as "paid collection" anyway. Just let the account drop dead and then dispute it. However if the account is fairly recent and is going to be on your account for some number of years then it is best to first dispute it, it may drop just from this, if is doesn't then write the collection agency and offer to pay them 50% in exchange for them deleting the record (there are sample letters demonstrating how best to compose such letters). If they don't respond or respond negatively then write them another letter demanding they validate the debt (again, use examples found on the Internet). In the end if they still do not delete the account then pay it. 

The "paid collections" you can have removed after the drop dead date as well, the difference hear is that it looks better to make a good faith attempt to pay your debts than to not. So it just depends on your situation and how long you think you can go until the negative marks on your account drop off. 

Reply by
justd80010

5 Contributions
2 People Helped

i am agree with you i paid all my collection account.  i just get my credit report and they all show paid collection i call Expedia they said still there until the date collection account was open i dont get it the main reason you paying is to be under a good standing and STOP PEOPLE calling you to paid in full. :(

Reply by
chula95

2 Contributions
0 People Helped

so even if you pay it off and ask them to remove it it will still be there?  I was told by someone from expeiran that if i would pay off my hospital bills that went to collections, it would drop my credit score by 30 points then every year after on the payment date my score would drop a little more. Is there any way around this?

Reply by
Taraswank

2 Contributions
0 People Helped

medical bills stay on collection agency reports for seven years

Reply by
zumbafan

2 Contributions
0 People Helped
Helpful to 3 out of 6 people

There is your problem - you called an online travel agency rather than Experian.

Reply by
bhuff85

1 Contribution
3 People Helped
Haven't tried it yet
Helpful to 6 out of 6 people

I found this pay for deletion sample letter http://www.credityoda.com/pay-for-delete-letter.html. I have not tried it yet but it looks good.

Response by
N40

1 Contribution
6 People Helped
Helpful to 3 out of 3 people

i actually started using this program in june of last year. it showed i had a score of 645 and i wanted to improve it so i paid off all my debt and got all the bills switched over my name. i go back last month to update it and my credit score droped more than a 100 points. does anyone know how and why hat happend.

Response by
mayofire

2 Contributions
3 People Helped
Helpful to 17 out of 18 people

There is also a matter of the age of the debt.  All debts will age off your credit reports after a certain period of time (7-10 years).  Before just automatically going and paying off all your debt, you need to review what the debt is and how old it is.  If you have a debt that is written off or sent to collections, when you agree to a settlement or make a payment, that debt is brought current.   If most of the debts paid off were older and you paid them now, it will in fact affect your credit score in a negative manner.

It's some times better to let older debts (over 5 years) go and not pay on them.  In a lot of cases they will be removed from your credit report after 7 years.  You should do your own research on this and make your own determination in a case by case manner.    My fiancee has several accounts that were sent to collections back in 2006.  By making a payment, it now makes the account current.  However if we leave the account as is, it will be removed from the credit report within the next 2 years.

And as the above user noted, there is also the factor of closing old credit accounts.  When you close the credit or other installment account, this effectively lowers your available credit and will therefore lower your credit score because you now have less credit at your desposal.

Reply by
swallace1006

2 Contributions
17 People Helped
Helpful to 16 out of 18 people

Believe it or not, paying off your bills, like credit cards, will actually HURT your score.  The Credit companies WANT you to use your credit, just not abuse or be irrisponsible with it.  As a GREAT general rule, keep your balances around 30%, but no more than 50% of your limits.  Your score will jump as high as 30 points almost overnight.  Remember, keep your balances to LESS than 50% of your limit(s), and keep them there.  And watch how fast your score will climb. 

Reply by
ickyj

1 Contribution
16 People Helped

It depends, as you were paying off your debt were you closing the accounts it was linked to? If so that loss of available credit will negatively impact your account.

Reply by
sglynn

1 Contribution
0 People Helped
Helpful to 6 out of 7 people

I contacted a company that I had two months worth of collection history and they stated they were sending a letter to me and to the three credit agencies to have it removed. Will that increase my credit score a lot or a little?

Response by
dawna45419

1 Contribution
6 People Helped
Helpful to 4 out of 4 people

 My understanding is that it will always show "0" balance if you took a charge off (settlement for less than the original amount) and it was reported to your credit report companies.

However, that does not mean that it won't have a negative effect on your credit score.  

I believe it still shows the amount owed if it goes into collections and is not resolved with the original company or the collections agency does not report your repayment correctly.

Reply by
Tashinawin

6 Contributions
80 People Helped
Helpful to 4 out of 5 people

it depends on what they send. if you payed a settlement amount it could show on your report different ways.  i have one that shows "bad debt" even though it has a zero balance.  They offered me the settlement amount they should be satisfied with the debt but it doesn't always work that way.  another one shows account closed and balance zero but states paid less than original balance. 

Reply by
bucher5

1 Contribution
4 People Helped
Helpful to 0 out of 1 people

If you pay an account and it says something like that you can make a comment on your reports telling what happened for potential creditors to consider your side when making their decision. 

Reply by
justd80010

5 Contributions
2 People Helped
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