If you have collection accounts less than 2 years old. To increase your FICO, should you pay the bad debt?

Answer 1

Your scores won't go up, all that will happen is it will show as a paid charge off. Your scores may even drop for awhile since the account would be updated with the payment. Though the reporting time will stay the same.

The best thing to do would be to first send the collection agency a debt validation letter.
After they properly validate the debt, you might send a pay for delete letter to them.

In that letter you would request to pay a percentage of the amount. Alot of how much you should offer would depend on if they are the first collection agency to purchase the debt. They usually purchase debts for somewhere around .50 cents on the dollar. If they are a second or third agency to purchase the debt, the amount paid is less, sometimes for pennys on the dollar or a couple of cents on the $100.00.

Also include that if they accept your offer they will:

Delete anything they have placed on your reports.
Not sell the debt (which they may do even though it is paid)
Not sell the remainder of the debt.
Not continue to collect on the debt.

I would suggest going to the site I am listing and do some reading. It is a do it yourself credit repair site.
There are many people who have gone through what you are going through and have shared their experiences.
You can also ask any questions that you may have concerning this or any other credit related issues.

Answer 2

If they are less than 2 years, I would contact them about making a settlement. Sometimes they will accept cents on the dollar. Your credit report will show that you settled, but that it was resolved and paid. Of course the better option is to completely pay but if they are ready in collections anyway, I'm not sure it would be that much better to be worth the extra cost. It would still say that it had been in collections but was eventually paid.

Answer 3

yes, on the condition the creditor will remove it from your credit file.