- July 25, 2013
- Posted by: Joel Firestone (G-Net Consulting)
- Category: News
Did you know…Paying off a collection account does not normally have a positive effect on a credit score? On the contrary, it can actually have a negative effect. The reason being is that the bureaus will not back date the payment date. So that means when a collection is shown as paid off, it will bring the ‘date of last activity’ reporting date current, making it look like it is a recent collection. The occasional exception to this is if it is the only collection the borrower has, only then can paying it off help…sometimes. Paying off revolving, charged off accounts can also sometimes help the score. But it’s important to note that doing this is always somewhat of a risk because there is the possibility of hurting scores further. Utilizing Advantage Credit’s What If Simulator and their experienced staff can help you determine what effect these actions can have on credit scores.