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toni1218

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Should I pay my cc down first or pay off my collections which has a heavier impact on credit score?
i plan on paying them both of course

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paying CC's off will usually help your score, paying off collections may actually hurt your score initially. i know it sounds counter-intuitive, but if the collection is a couple years old, when you pay it off they update the reporting date. now you have a paid in full collection that is recent, which can hurt your score. now, if you get an agreement for pay to remove, then it's a whole different ball game. if you get that agreement, then the collection will be deleted from your report, like it never happened! this could have a HUGE impact on your credit. some companies will not do pay to removes, they have agreements that do not allow them to do it. also, something to keep in mind the new FICO 8 models ignore colections under 100 dollars, and the new vantage 3.0 models ignore paid collections, and unpaid collection under 250$. 

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I speculate that paying off the CC first would be the biggest impact.  Pay to reduce utilization of all your cards, and that should help.  Paying off collections won't affect utilization ratio.

This effects the score.  Someone who actually looks at the report will see the collection, and paying that off may help more in that case.

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Credit cards first

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Creditors look at your current debts first then your debt to income ratio, if you have high credit card balances (I.e. over 30% of the balance) that actually drives your credit score down. If you lower you cc debt below the 30% mark you will actually see your credit score increase after a month if those balances stay below 30%. Once your cc debt is down then pick the most recent collection and start there, either payments or pay it off and see if they will remove it and negotiate the payment for a lower settlement if you pay it all off. If they won't remove it, keep receipts and get the final receipt showing paid in full to take to potential lenders.

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Pay off your CC Frist!

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