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Question By
tyetyekyya

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WHY IS PAYING COLLECTION ITEMS LOWERING MY CREDIT SCORE??
I paid off 3 collection items the end of August 2014. One of the items has been totally removed from my credit report and the other two show $0 balance. I checked today and my credit score went DOWN -5 points!! WTF!!!!! Does anyone know why? HELP!!

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The reason for this is because paying them acknowledges the debt and resets the date on it - which means 7 years from when you pay it, it will be removed. Unfortunately, the amount of the balance makes no difference at this point. You need to request a pay for deletion, and get it in writing. For the accounts you have paid already, you can try calling the company and asking for them to remove it. I've known people who have called often enough that they've removed it, simply to stop the continuous calling.

Reply by
KittyHawk27

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Can anyone suggest the best method to "request a pay for deletion".  Discover Card does not delete any reporting.  I just spoke to them.  Not sure what to do with my only remaining "bad" card.  I struggle with paying it every month vs. not to because not all credit bureaus are equal.  One agency recognizes my good deed of paying it off whereas another does not and it has a huge negative impact on my report and score.  Someone, please help.

Reply by
Janethevirgin

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I have been diligently fixing my credit since last august. I finally got down to my very last account in collections and negotiated a pay for delete with the creditor.  I paid it in full and as soon as it was deleted from my credit report my score dropped a whopping 24 points. I was completely thrown. And very dissapointed. It seems like no matter how hard i work to get it together it still bites me in the ***. That was a huge hit for someone with already very low credit score.  :-(. Now i regret doing the pay for delete. Should have just left it on there. Smh

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paying off old collections will mark them as active. even thought paid off...best bet is to pay your current tradelines and focus on debts within past 2 years...paying debts older than that can hurt more than help.

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Everything is negotiable! However, if it is so close to the 7 year mark it might be best to let that collections fall off and save that money. Otherwise, the way to get it removed off one's credit report is by requesting it in writing and/or negotiating those terms in the repayment deal.  It is law that the information cannot be reported past 7 years, 10 years if bankruptcy.  Collections are referred to as derogatory remarks and once removed can only increase a credit score. It recently happened for me! Credit scores are constantly fluctuating depending on one's own credit/financial activity.  I would suggest to stay on top of ALL of one's own credit reports and monitor them daily, weekly, monthly.  Be diligent.  Be proactive.  Good Luck!

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Reply by
pennstate04

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not necessarily. some companes are not allowed to pay for deletion because of contracts they have with the credit reporting agencies. 

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Okay, so...  The two most common credit scores used for credit decisions today, FICO 4 and FICO 8, aren't directly affected by paying off collections.  That said, there can be two fairly significant indirect effects:

1)  Unpaid collections are included when calculating the amount of credit used, and utilization is a major factor in your credit score, so if the collection amount is a significant percentage of your total available credit limits then paying off the collection could lower your utilization and increase your FICO score.

2)  Collections without any activity in the last two or three years hurt your score less than collections with recent activity.  Updating the collection to paid on your credit reports counts as recent activity.  Paying off a several year old collection with no recent activity could lower the length of time since last activity on the collection and lower your FICO score.

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Yes I am doing the same in hopes to get my score up! I don't wanna pay these things off just to have my score go down! Are we better off not paying seeing that it's only a few months off for being 7 year mark!

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Reply by
pennstate04

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if it's only a few months from 7 years, then yes you're better off not paying it. that may sound shady, but it's the reality of credit scores. let the 7 years lapse and it will be gone. 

Reply by
moon1970

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Even after the 7 year fall off, the credit can go down. I cleaned up my report after divorce. I finally hit the 7 year mark on everything over the past year. All of my negative came off and is not longer reported. When my last one was, it dropped my credit score by over 66 points with all credit reporting agencies. I was finally back up to around 618 and now they are all as low as 533, 553 and 573 simply due to old negatives coming off - nothing being paid off. That, and I removed myself from a family member's credit card because the balance was so high (she put me on there to help me rebuild my credit). I've learned that this was a mistake to remove my name from this card. I think it's what dropped my score by such a massive amount. It's extortion, these freaking scores. It's a ruse. 

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I would like to see an answer to the original question. I am current negotiating with three collectors to pay them off, but I don't wanna do it and LOWER my scores. Thanks

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Reply by
pennstate04

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many people have indeed answered it. paying old collections only to have them report a more current paid in full date can actually lower your score. in the long run, when you're building credit, you will eventually overcome the negative items. otherwise the only other option is wait the 7 years, or negotiate a pay to delete. 

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This worrys me because i dont want to pay off debt just to lower my credit score. I'm trying to buy a house next year.  

Reply by
KittyHawk27

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To Riahbabii: Hello... paying off debt does not lower credit scores.  If your goal is to purchase a home, eliminating your debt is the best course of action.  When I purchased my home, my broker found a closed account with a balance.  It's more appealing to the lenders to see that you paid off the balance even if the account is closed.  If you are 12 months from a potential purchase, then now is the time to pay if off as time works with your.  Lenders are looking for timely payments on any active account as well as a debt-to-income ratio of 30% or less.  They want to see you can handle the mortgage payment.  Reducing your debt actually increases your score.  All bureaus are not created equal however.  My TransUnion has got me in the mid-800s yet Experian has be in the low-700s which is what I'm struggling with.  Good luck Riahbabii !

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How do i pay off mine... i need help... Thanks in advance

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Credit history or age plays a role to.  If the collection account is not closed but active, paid and removed,  Then it can lower your credit history.  I have fairly good recent credit history, but most of my credit history is 10+ years of student loans which is mostly negative.  Though the removal of most of the negative that was active was good.  My credit age drop to fairly young and killed the progress i made in the past few years.  Hopefully it recovers fast but its the ssad system we live in.  Maybe if we could remove the negative and keep the positive and keep the credit age.

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