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ozk

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Will paying off debt collectors improve my credit score?
I got into a financial bind a few years ago and a couple of my accounts went into collections. I want to finally start to improve my credit. Should I start the task of negotiating with the collection agencies to set up payment schedules in hopes of it improving my credit score or since I would be paying a debt collector would it even matter to my credit score if I paid them off?

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You are almost certainly not going to get a quick and impressive score boost now. Good for your for wanting to improve your credit, but dig in for a long-term effort.

Whether you should pay the collectors at all depends on how old that debt is. If it were one or two years old, it might be worth your while to start the payoff process.

However, one of the crazy flaws in the credit reporting system is this: if you make any arrangement to pay an old debt, the holder of that debt can then legitimately "re-age" it -- meaning it can remain on your credit record for another seven years and that the statute of limitations for a lawsuit against you gets "re-booted." So a debt that's a few years old is nearly always better to ignore for credit scoring purposes.

What you decide to do is up to you, of course. But for most people in your circumstances, the best course is to wait it out until the old bad debts roll off your record and in the meantime start to do small things to build new credit (like getting a secured credit card) and manage the new credit responsibly. Good luck!

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