If I pay off something in collections will it hurt my score

Asked by Mark And Jessica Ashby, White Pigeon, MI Tue Jul 30, 2013

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Don Groff’s answer
Don Groff, Agent, Austin, TX
Fri Aug 2, 2013
It possibly could. It really depends on how old it is. It definitely won't really help you credit wise unless it is fairly recent. If it is older than a year or especially if it is older than 2 years I would just let it go and if a lender tells you to pay it off or settle to get a loan than do it at that time. Otherwise you are not going to get much benefit at this point.

Don Groff | REALTOR® & Mortgage Broker
Austin Real Estate Pros & 360 Lending Group
o 512.669.5599 | m 512.633.4157 | listings@dongroff.com
websites: http://www.AustinListed.com | http://www.360LendingGroup.com

(If my answer is helpful indicate by THUMBS UP or BEST ANSWER. Thank you )
Web Reference:  http://www.AustinListed.com
1 vote
Tommy Burris, Mortgage Broker Or Lender, Baton Rouge, LA
Tue Jul 30, 2013
It can lower the scores. Not always. Here is a link to a helpful book.

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 => http://www.ntreisinnovia.net/cgi-ntr/BR_login?0501134
1 vote
Barbara Coker, Mortgage Broker Or Lender, San Antonio, TX
Tue Jul 30, 2013
I want to restate the warning that paying off an old collection can actually lower your score because it "updates" it. However, if it relatively recent, perhaps in the last 12 months, maybe it's OK. We can't guarantee you anything on this board. I have been told that you could dispute paid collections to the bureaus. Supposedly since the collection company already has its money, it won't respond. After 30 days, the disputed item is removed by the bureaus. No guarantee on this though. Be careful, and work closely with your loan officer on this step. In fact, who told you to do this?

Barbara Coker
Licensed Mortgage Loan Officer
100% Home Loans All Over Texas!
1 vote
Ron Thomas, Agent, Fresno, CA
Tue Jul 30, 2013
If they report that it was "paid, but less than the amount owed";
then it will hurt, but not as much as not paying them.
Sometimes you can negotiate that they will put a more favorable notation on the record; "PAID IN FULL".
Push them!
1 vote
Michael Abra…, Other Pro, Deerfield, IL
Thu Aug 22, 2013
If the Date last reported on the account is within the last 6 months, paying it will improve your credit score. If the date last reported is over 2 years ago, paying the account may lower your credit score.
Web Reference:  http://www.creditfirm.net
0 votes
ryateslenders, Agent, Plano, TX
Tue Aug 20, 2013
No but wont help either. Paying off collections is no way to get your scores up because it will still show as a collection account just that its been paid instead of having a balance. Regardless of what you may have been told your scores will not increase by paying these off, a collection is a collection regardless of disposition in the algorithm used by Fair Issac. Email me or visit our website if you want to speak to someone that knows credit and can give you some guidance on what to do.
0 votes
Michael Abra…, Other Pro, Deerfield, IL
Wed Jul 31, 2013
Hello Mark and Jessica,

Accounts reporting activity within the last 6 months carry the most weight on your credit scores.
The next tier is accounts reporting activity within the last 24 months.
And finally, accounts reporting last activity outside of of 2 years have the least amount of impact on your credit scores.

Check the "Date Last Reported" on the collection account.

If the collection's "Date last reported" is over 2 years, paying it may decrease your credit scores. The reason is that although you have lowered the balance to $0 and updated the status to "PAID" (which are all positive things", the collection's "Date Last Reported" will refresh to the current date and cause it to have a higher impact on your credit score than before. Thereby lowering the credit scores.

But, paying an account which is already active within the last 6 months will help you to increase your credit scores.

So, here's a little cheat sheet for you;

Active within the last 6 months - Pay Collection
Active within the last 6-24 months - Depends on a few variables. Speak with a credit consultant for the best possible advise.
Last active over 24 months ago - Don't Pay Collection
Web Reference:  http://www.creditfirm.net
0 votes
Tamika Goree, Agent, Arlingon, TX
Wed Jul 31, 2013
Good Morning Mark & Jessica,

It honestly depends on how old the collection is. If it is less than two years old, more than likely not. Anything more than 2+ years, more than likely yes. Have you two thought about going through a credit repair program? If you two need a few credit repair referrals, I will be happy to email those to you. Please feel free to contact me at your convenience. I look forward to hearing from you!

Make it a Great Day!

Tamika A. Goree
Broker | Owner
The DFW Property Shop
Direct: 972.697.1178
Fax: 972.665.7148
Email: tgoree@thedfwpropertyshop.com
0 votes
Margie Johns…, Agent, Cypress, TX
Tue Jul 30, 2013
I have been told that greater weight is put on activity within the past 12-24 months. If the debt is older than that and depending on what kind of debt it is, as Lowell Sterling below put it, you may be waking a sleeping giant. I refer my clients to "Improve My Credit USA" for expert advise on how to go about making these decisions. They have different levels of service from access to free information and materials on their website, instructional materials that you can purchase if you want to work on improving your credit on your own, to full service credit repair solutions. Check out the website below. I hope it is helpful.


Margie Johnson
BHGRE Gary Greene
0 votes
Mark McNitt, Agent, Houston, TX
Tue Jul 30, 2013
Mark and Jessica,

It should help, but have someone look at the entire report for you. Other items that you could pay (such as brining down a large balance on a credit card) may help you more and also save you money.

A local loan officer can help you if your ultimate goal is to get yourself in position to get a mortgage. Be aware of those companies you pay to assist you. Most of this can be done yourself.

Mark McNitt
m 832-567-4357
Bernstein Realty, Inc.
0 votes
Joe Cano Jr, Agent, Houston, TX
Tue Jul 30, 2013
Takes time to show on report, but quite the opposite from hurting your credit score. I think we should get everything in writing, so of course retain something in writing. Think that's called a receipt? More importantly, as previously mentioned, the paid debt takes time to show on the report, so yes, for a more immediate solution, get something in writing saying that the debt was paid off.

Joe Cano - Realtor/Locator
(281) 785-5132
Web Reference:  http://joelocator.com
0 votes
Fritz Walter, Agent, Milford, CT
Tue Jul 30, 2013
Hi Mark and Jessica, Ron's answer below is right on the money. If you have any further questions regarding the lending process feel free to reach out to Lowell or myself. My company is licensed nationwide and has an A+ rating on the BBB so I can find you Senior Loan Officer with a wealth of experience in your particular area.

All the best,

Fritz Walter
VP of Retail Sales
Toll free: 800-359-1996 x551
Direct: 203-783-4551
Email: fwalter@totalmortgage.com
NMLS ID: 387922
Visit my webpage: http://www.totalmortgage.com/bankers/fritz-walter/
Company Website: http://www.totalmortgage.com
Total Mortgage Services, LLC - NMLS #2764
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0 votes
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