Paying off debt to a collection agent

Hi dshell,

Paying off the debts on time will definitely have a positive affect on your credit report. With time, you???ll find that this has helped you in increasing your credit score.

Well, it will take some time to increase your credit score once you???ve paid off the debts in full on time and if it has been reported correctly to the credit bureaus.

Take care.

Paying off a collection account never has a positive affect on your score. It may lower your debt to income ratio but your score does not increase for making payments or paying it off.

I agree with SOAPLADY. Paying a collection company decreases your score. Who told you otherwise, a collection company?

Paying a collection account DOES NOT decrease your score. It is neutral.

Hi,

I think you should pay off your debt as soon as possible because although paying your debts won't have any effect at all on your credit score, defaulting on them will surely decrease it.

If you want to increase your credit score then you have to include more positive information such as taking out small loans and paying them back in full within time and keeping your credit card balances below their credit limit.

Hope these suggestions help you.

Quote:

FICO is a risk analysis that estimates your liklihood of becoming delinquent at avrious levels within approximately the next 24 months from the date of your scoring. It is not an analysis of your risk of payment or non-payment of existing delinquent debt. Apples and oranges.

A collection is but one of several indicators of delinquency that pertain to how delinquent you have become. The level to which you have become delinquent is a risk analysis factor important to lendors in estimating not only the chance of delinquency, but its potential to increase in severity.
Delinquencies that are only 30-days late have minor effect on the risk analysis, while those that have progressed to 60/90/120+, been held by the creditor to be "uncollectible" (a serious view of your risk by an existiing creditor, and reported in the form of a "charge-off"), and/or their need to resort to a debt collector to address the delinquency, represent a sliding scale of delinquency. Paying at any point stops the escalation, but it is the absence of further escalation of delinquency that "aids" your FICO score, not the payment of the debt itself. FICO does not directly score the payment of debt.

Paying off a debt, either by way of paying the OC or through their agent, their debt collector, staves off the chance of further derogatory reporting if legal action is thereafter resorted to, and a judgment is secured and reported to the CRAs.

You dont have delinquencies on an account that is in collection. The account is already, by definition, a delinquent debt, and the account is closed. No more monthly delinquencies occur. Debt collectors dont report monthly delinquencies to a CRA. They are not your creditor, and dont bill you.

Collections do decrease in scoring impact over time, but not a a result of any payment of the debt.

Thanks for your reply.....I would think that lowering my debt to income would help my score.
But i did get a approval with orchard bank and going to use it at a max of 20% of the LOW limit to help my score.
I also got a secured card with capital one to also help improve my score....
Sorry if this next question is silly but if my score shows i'm in collections already and they don't report, hey, this guy has been paying every month for the last year, why wouldn't i just stop paying the collection agency's and just hope they don't sue?
Point being, won't that collection report fall off after 7 years anyway?

The payments made have restarted the SOL....so it gives them more time to sue. WOuldnt risk it

Payments only reset SOL if your state SOL statue includes such a provision. Many dont.
As for paying a collection, if unpaid, it can remain under collection forever. In some transactions, such as a mortgage loan, you are asked to disclose all unpaid debt. In some instances, the 7 years plus 180-day CR deletion period for collections might not apply, such as if you apply for credit that meets one of the exclusion provisions under FCRA 605(b), in which case all prior credit reporting might be obtainable by the prospective creditor, including reporting that is otherwise subject to the CR exclusion provisions of section 605(a).