Do Old Collections Drop Credit Score When Paid

We recently paid off the absolute last of our collections and were wondering how if at all it will affect our credit score. We were told by someone that paying it derogatory would initially hurt our score because it renews the debt or gives it a more recent last date of activity. How much can we expect paying the collections to impact our score? When does the score typically bounce back from this type of impact?testtest

Paying off a collection won't remove it from your credit report or improve your credit scores. Here's the deal, with a collection account you don't pay it to improve your scores - you pay it to keep your scores from getting worse. If you don't pay it, the collection agency could sue you, file a judgment against you and/or garnish your wages (if it's legal in your state). If they file a judgment against you, you're looking at another 7 year blemish on top of the collection record.

Another reason to pay a collection is because many lenders (especially mortgage lenders) will favor a paid collection over an unpaid one. And in some cases, they won't approve the loan until a collection is paid.

When you pay a collection the account will be updated to show that it was paid but as far as your credit scores are concerned, the fact that the account made it to collection status is what hurts. Your scores will still consider this information because it reflects your past credit patterns and is predictive of future risk. The only thing that will help improve your scores in this category is time. The older these collections get, the less impact they'll have. But you also need make sure you're adding new positive credit information to your reports so the scoring models can see that you've changed the way you've previously managed your credit obligations.

I know it can seem overwhelming and confusing but you're on the right track so don't give up. To create a realistic plan to improve your credit scores you need to understand what goes into your scores and how they're calculated. A very good place to start is by reading: What can I do to improve my credit scores?

Hope this helps!testtest