Credit Score in Houston>Question Details

Tracy.jones31, Other/Just Looking in Houston, TX

Will paying off accounts in collections lower your credit score?

Asked by Tracy.jones31, Houston, TX Thu Jan 31, 2013

Help the community by answering this question:


Good morning Tracy,

I see you've received lots of conflicting responses. Here's the correct response based on my professional experience as a Mortgage Banker and based on and their education tab on the website: Recent activity on ANY credit account (whether that be a good or a bad account) has a lot to do with your current credit score. If you're paying all your bills on time, that's a good thing and that has a positive impact on your credit score. By contrast, if you pay off a collection account and the collection agency updates your credit report to reflect that account as PAID, then that recent activity will have an effect on your score, albeit a negative one.

You should know, also, that depending on the loan program you're applying for the mortgage with, you may not be required to pay off a collection account depending on the circumstances of that account. Therefore you want to identify and meet with a Local Mortgage Banker to get prequalified BEFORE you pay off any collection accounts. Your Mortgage Banker will review your credit report and other qualifications and can guide you accordingly on whether or not to pay off the collection accounts.

For other information about credit from a non-biased source I have found that CONSUMER ACTION is an excellent resource for objective advice on all things credit related. You'll find free and sincere advice on everything from settling collection accounts to rebuilding credit to building credit from scratch on their website.

Beware of anyone offering to "repair" your credit! The Federal Trade Commission issued a stern warning last year that such offers are scams. Find more from the FTC HERE.…

If you determine you will pay off those collection accounts, see my advice on my Trulia blog about how to pay off a collection account linked below.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services

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3 votes Thank Flag Link Wed Feb 6, 2013
Paying off collections may lower your credit score. Credit bureaus look at the last date of activity on each account to determine the impact it has on the overall score. So when you make a payment, it resets the clock renewing the last date of activity and makes the collection fresh again.

Your credit score could drop temporarily but will go back up with time.

Anna Maria Durr, NMLS 266699, TREC 596662, Codemark Financial
2626 Richmond Ave., Houston, Texas 77098
1 vote Thank Flag Link Fri Feb 1, 2013
No. Not 100%

I speak from experience too. As a 9 year veteran as a loan officer reading credit reports.

I have run score simulations for clients. Sometimes it lowers the score. Sometimes it raises the scores. Sometimes it does nothing.
Having a loan officer who can run the ACCURATE score simulations is a lot better than calling some credit repair hack who wants your money.

Consider the previous post SPAM!!!!!!!!!!

Your best resource is as they are owned by the people who developed the FICO score.... The Fair Isaac Co

Tom Burris
Mortgage Banker
(214) 763-4629 cell/text/nights/weekends(Really!!)
Lending all across the entire Great State of Texas!!
NMLS# 335055
Search Dallas area MLS for FREE. No registration =>
0 votes Thank Flag Link Sat Feb 23, 2013
YES 100%. You score will drop more as the credit will read paid but 120 days past due and then you will still have to dispute the negative remarks on your credit score. I am speaking from personal experience. Don't do it. The damge is already done. Hire to remove it fro your report.
0 votes Thank Flag Link Sat Feb 23, 2013
No paying off accounts in collections will ultimately raise your score. Accounts in collection are a significant negative. It' won't be instantaneous as the fact that you've had accounts go to collection is a negative and it takes some time for them to no longer be considered but rest assured paying these accounts off is to your benefit.
0 votes Thank Flag Link Sun Feb 3, 2013
You should speak with a credit counselling expert from a reputable company. A few of those companies that my clients have used and are pleased with are:

Tranquility Credit Repair

Lexington Law

Caravan Credit Services

Credit Recovery Group

Improve My Credit

Information from the Federal Trade Commission:…
0 votes Thank Flag Link Sun Feb 3, 2013
Yes Howard is correct Lexington Law works great. They don't repair your credit. They delete the negative from it!!
Flag Sat Feb 23, 2013
It might lower them.... It might raise them.

Now, collections usually do not need to be paid as a condition of loan approval. I wouldn't touch them until after you get a mortgage.

If you are trying to buy a house, your loan officer might have access to a score simulator that they can apply to your credit report.... I have done this for clients.
0 votes Thank Flag Link Fri Feb 1, 2013
Tracy ...

Not at all ... in fact it will eventually raise it. But be aware that lenders are more concerned about the fact that the debts went to collection in the first place. Paying them off will ultimately reduce your debt ratio, which will positively affect your FICO score. Pay off those bad accounts. I wish you well.

Al Geffon
(713) 213-6350
Web Reference:
0 votes Thank Flag Link Fri Feb 1, 2013
Dear Tracy

Pay off your debts in Collections, it will not lower your credit score.

It will actually help improve it longer term, in 90 days.

Best regards
Web Reference:
0 votes Thank Flag Link Thu Jan 31, 2013
I would think it would improve it, but you have to have the promise in writing to get it removed.

Check out this website for more info.…
0 votes Thank Flag Link Thu Jan 31, 2013
Bruce Lynn, Real Estate Pro in Coppell, TX
May or may not. I would suggest you speak with a loan officer or a bank. They can pull your credit report and look at your averall picture. It is also important that if you do pay off any account that you get written approval that the account has been paid
(0 balance )and that they will take it off the credit report.

Hope this will help you.
Feel free to contact me if you need assistant.
Remax 360
0 votes Thank Flag Link Thu Jan 31, 2013
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