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Will paying off collection accounts raise my credit score when they are reported as paid? |
Right now my score is 595. I have an auto loan that is almost 3 years old and never late, a student loan that is 3 years old and never late, and a credit card that i have in good standing, never late. But i have 4 collection accounts on my credit report. I paid 3 of them off a couple of days ago, and i'm working on getting the last one paid off very soon. When these collection accounts are marked as paid, rather than delinquent, will this raise my credit score substantially??? Nope, it wont raise your score one single point. Depending upon how long ago they were it may actually bring your score down because you are bringing an old debt current. There are a lot of people here who give bad advice that say it will go up when it never will. Your credit score does not take into consideration whether a collection is paid or not but it does consider how old and that it is a collection. Just dispute them to death, the best thing to do is dispute the high balance or something of that extent. I want to recommend a book to you. You would think there is a simple, very clear answer to your question, but it is more complicated than just paying these things off. The book is titled: 6th Edition Credit Repair. The authors are: Attorneys Robin Leonard & Deanne Loonin, authors of the bestelling Money Troubles. 800-955-4775. Nolo Press. in Berkeley, CA. nope. it will have almost zero impact. You need to request that the collection agencies delete your account when you pay them. Unfortunately, you lost your leverage on the first 3. One thing you can do after they are paid is to start the dispute process with the credit bureaus they are being reported to. Inevitably, there is some factual error, from amount listed, to opening date, etc... that you can use to dispute the account. Collection agencies rarely bother responding to disputes on paid accounts. They know you'll simply dispute it again and again til it's gone. It's been said that paying off collections can actually drop your scores initially, becuase you just made the last activity on the account newer. And paid or unpaid collections don't vary much on the impact on a score. Dispute like crazy until they are all removed. Maybe then your scores will actually rise. And keep your credit card under 50% of it's limit, or it will pull your score down. 10 years in mortgage banking It will bring your score down to begin with. The part of your score that suffers from this is your bill-paying record, and that accounts for 35% of your score. And the other thing you need to know is that as time goes by, old information has less and less weight in the calculation, until the 7th year where they disappear whether they have been paid or not. The reason why it hurts your score is that by paying, you moved those debts from "old" to "recent", thus giving them more weight. Whether you have paid them or not isn't computed. If you think this is unfair, keep in mind that had you not paid, they would have dropped off your report after 7 years, no questions asked. And as a parting note, I suggest a little self-education on the credit scoring system : http://financialbasics.blogspot.com/2006... Hope it helps |
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