should i pay off past due accounts to improve my credit score?

Asked by Aquintanilla87, San Antonio, TX Tue Mar 2, 2010

i have been through credit repairs that tell me not to pay off past do accounts is this correct and if not will it improve my credit score?

Help the community by answering this question:

+ web reference
Web reference:


Josh M. Boggs, Agent, San Antonio, TX
Mon Mar 8, 2010
Good morning Aquintanilla,

You are being faced with a question i've seen for years as not only a Certified Credit Counselor through NFCCC, as an approved trainer of the Freddie Mac curriculum "Credit Smart", financial director of education with CCC Centers, but also a Realtor that personally instructs and guides my clients with their lender's advice.

The crux of the whole thing is even Fair Isaac Corporation (FICO) does not release their formulas as to how scores are calculated. Everyone is simply doing as much homework as they can and trying to "break the code". And some are getting very close, for example.. it now can be proven that by having a Capital One credit card can actually hurt your credit even if it's current and never over the limit.

By past due accounts you are referring to revolving consumer debt (credit cards) or installment debt (car payments), then almost always the right thing to do would be to bring those past due account current and/or pay them off (again... even that can be tricky.. it's a fun credit game).

Or by "past due accounts" you are referring to old collections (any account turned over to an outside company for collections), then the answer is not as clear.

This is where it really helps to have a mortgage lender (one that really knows what they are doing and can understand credit) and seek advice from them. Typically, they will consult with their underwriters on what exactly they would like for you to do. It's truly your best answer. Remember, you are only concerned about your credit so you can obtain more of it (ie Mortgage), therefore consult w/ the actual lender you are looking to obtain a mortgage through. It's much better to get it "straight from the horse's mouth" then try and stab away in the dark by listening to everyone's opinions on what you should do. Unless they are willing to step up and give you the loan (I'm even talking about the credit repair company here), then I would seek counsel from the source.

Best of luck and God bless you on your venture
Web Reference:
0 votes
Texas Banker, , Houston, TX
Wed Mar 3, 2010
Paying off past collections can hurt your credit in the short term by bringing them current. You need to get the creditor to agree to remove them after they are settled.

You can do it your self or work with a professional.

Let me know if you need further help.

Erik Konar
Mortgage Banker
Office: 281-583-0674 Fax: 713-400-8915
0 votes
Bruce Lynn, Agent, Coppell, TX
Wed Mar 3, 2010
The best way to repair credit.....

1. Pay current bills on time.
2. Reduce credit card balances to less than 50% of limit.
3. Pay off past due accounts and charges offs. Start with smallest first.

Don't pay to do this, use the money to keep current and pay off debts.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Tue Mar 2, 2010
Pay off anything that can be paid off, stay current on your bills, keep your credit cards below 50%, etc.--in the long run, you'll be happy you did. Also consider speaking to any qualified loan officer(s), see what your budget can handle and check your score again--loan officers oftentimes have great suggestions as to best improve the score in the fastest time
0 votes
Robin Silver…, Mortgage Broker Or Lender, Garden City, NY
Tue Mar 2, 2010
I have also heard credit repair people say this, however I have had my clients do something a little differently. I have them call the creditor and try to get a letter stating that the collection or charge-off was filed in error, and you will pay it off. When this happens, and the item is removed altogether, I have done rapid rescores for people and see the score jump substantially within the week.
0 votes
Doc & Ellen…, Agent, San Antonio, TX
Tue Mar 2, 2010
Hi, Aquintanilla87,

First of all, here's a reliable source:

Second, as in many things in life, there is no quick fix or magic pill that will heal all ills.

1. Pay your bills on time from now on, reduce the balances on as many of your accounts as possible, but don't close any accounts.

2. Go through your credit report line by line, and correct any errors that you can. Understand that no government backed lender (FHA/VA/Freddie Mac or Fannie Mae) will even process your loan if you have outstanding disputed issues on your report. That's because the old way to "fix" credit was to dispute everything in the hopes that the company would delete it rather than spend the time to investigate it. That doesn't work any more.

3. Don't open or close any accounts, unless your lender instructs you exactly how to go about it to improve your score. If you don't have any accounts open, you may want to open an account, borrow a little, pay it off and keep it open. Of course, accounts that are OLD have more weight.

4. Be careful about making changes relating to OLD accounts and chargeoffs. They don't carry much weight any more, but paying them off or changing them may refresh the data and make it current news.

The best thing you can do is to find a solid, experienced lender who will work with you to get these resolved. Most of us REALTORS® know one or two who will do a great job.

Best regards,

Doc and Ellen Stephens, REALTORS
Keller Williams Realty
10999 IH-10 West, Suite 175
San Antonio, TX 78230

(210) 696-9996, ext 409
Web Reference:
0 votes
Ralph Buller, Agent, San Antonio, TX
Tue Mar 2, 2010
Go to your bank, credit union or a local mortgage lender/broker/banker. Ask them to pre-qualify you. They will pull a credit report and go over it with you and advise you what steps to take to increase your credit score. That is a free service so don't pay anyone for an application fee, credit report or anything else. If I can help give me a call.
Ralph Buller
0 votes
John Doan, Agent, Irvine, CA
Tue Mar 2, 2010
I can answer that paying off any accounts that are delinquent will obviously improve your credit scores. Now there's a difference between "past due" accounts and accounts that are charged off or in collections. If it is in the charged off or collections stage, then yes maybe your credit repair person is right.
0 votes
Matt Stiglia…, Agent, San Antonio, TX
Tue Mar 2, 2010

The short answer? Maybe.

Your best bet is to speak to someone who a) knows credit issues inside and out and b) won't rip you off in the process. If you're looking to get your credit up in order to get a home loan, I would interview a few lenders. Look for one who knows something about credit re-scoring. I would speak to more than one lender as it's a rather critical issue and paying the wrong bill can hurt you more than help you.

If you're just looking to repair your credit, talk to a credit repair expert or a qualified CPA.

Hope that helps!

Matt Stigliano, Realtor (r)
RE/MAX Access
(210) 646-HOME
0 votes
Tommy Burris, Mortgage Broker Or Lender, Baton Rouge, LA
Tue Mar 2, 2010
The correct answer = It depends.
For example. I have seen people pay off old collections, making the date of last activity recent.... which lowered scores.
Read the book in this link.
0 votes
Chris Ebert, , Dallas, TX
Tue Mar 2, 2010
The issue is one of timing. If you pay off a delinquent balance and update the account it will not improve your credit score today. But over time your score will improve more with a -0- balance item than a negative item with a balance.

So if you need your score improved today the best way to settle an account is with the creditor removing or deleting the credit item off the credit report.
0 votes
Justin Werner, Agent, San Antonio, TX
Tue Mar 2, 2010
In general, if it is a newer item, then yes. But if it something from many years ago, then probably not. Speak with a Credit Counselor for the best info on this. Also, check out:…

Justin Werner, ABR, CDPE
Accredited Buyer Representative
Certified Distressed Property Expert
RE/MAX Exclusive
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more