Unpaid bills will devastate your credit score, logic would suggest that paying them off would send it in the opposite direction. But not all is logical when it comes to credit scores.
According to the creator of the most widely used credit score, paying accounts in collections won’t help. As far as your credit score is concerned, two things are considered: Has a collections appeared on your credit report, and when it was reported. So whether or not you pay your collections off is really a personal decision.
Paying off a debt in collections won’t improve your score. One of the big three credit reporting agencies, Experian, agrees. Here’s what the “Ask Experian” team says: Paying the debt won’t necessarily help your credit scores. Accounts that get to the collection stage are about as negative as it gets. Only bankruptcy is worse. As a result, any improvement, especially right away, probably will be very minor.
In short, paying debts in collection won’t influence your credit score. It may, however, influence a lender who looks beyond your score to its source, which is your credit history. If you were a lender, which would you rather see in a borrower’s credit history — an account they paid years late, or one they blew off and never paid at all?
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