top of page
Search

The Truth about Collections!!

Biggest Questions About Debt Collections & Your Credit!

Is a Paid Collection Better for Your Score Than an Unpaid Collection?

The answer is no, which could be surprising to some. However, resolving a collection provides other benefits, such as preventing the debt from being sold to another collections agency that could place another collection on your report, or lead to a lawsuit resulting in a judgment — both of which could drive your score down even further.

Are Multiple Collections on a Credit Report Worse for Your Score Than a Single Collection?

Not necessarily. The most important factors that affect how collections impact credit scores are those that look at how recently the collection occurred. As a result, you could, for example, be fortunate enough to get one of two collection debts removed from your credit report, yet see no score improvement if the remaining collection is the more recent of the two.

Does the Amount of the Collection Debt Matter?

Not at all, if the lender is using an older version of FICO — which is most likely, since the older models continue to be most widely used by lenders. Even if the newer versions are being used, the amount won’t matter if the debt is more than $100.

Will Settling or Paying a Collection Impact My Score?

No. Since, as we’ve learned, neither the dollar amount of a collection nor the paid vs. unpaid status has any bearing on the score, there’s no scoring impact from settling the debt.

0 comments

Recent Posts

See All

No Credit Score Required. The Responsible Way to Build Credit. 1. Apply for a Credit Builder Account with a Payment Plan that fits your budget 2. Make Monthly Payments Towards Your Savings Goal and Bu

How canceling a card can hurt your score It’s smart to have an idea of what closing the card would do to your credit score before you do it. Credit limits, and how you use them, matter Canceling your

1. Pay your bills on time Your payment history makes up 35% of your FICO score calculation. We recommend you always pay your bills on time and in full, but even if you can only pay the minimum balance

bottom of page