how many points does is raise ones credit when paying off a debit that is in a collections agency?

Answer 1

A paid negative is still a negative.

If you haven't yet, you should send a debt validation letter.
Make sure that the amount of the debt hasn't been illegally inflated, that they are licensed and/or bonded in your state if your state requires it and also that they have a legal right to collect the debt. (collection agencies have been known to collect on debts they have no legal right to collect on)

Send everything to them certified mail return receipt.
Do not sign your letters to them, type your name or print your initials.

If they are reporting on your credit reports, check to see if they are reporting accurately or not - if not, dispute it with the CRA's when you get the green card back from your dispute request.

You can also try to get them to agree to take a portion of the debt as payment in full. How much would depend on how old the debt is. If you are out of the collecting SOL they may allow a large deduction off of the amount since your offer to pay is the only way that they can get any money on that debt.

If you plan on paying and they agree to taking a portion of the debt as payment in full, make sure to have them agree, in writing, that the payment is considered payment in full - if you don't have that in writing, you may find the same collection agency or another one trying to collect on the remainder at some point.
AND request that they will remove anything they had placed on your credit reports upon payment.

They make deals like that on a daily basis. If you pay, make them delete.

Having them delete is 100% better than having a paid or settled negative reporting.

Answer 2

Unfortunately in my experience not much. I had the same exact problem and my score only went up 5-10 pts with all 3 agencies. Once it actually goes to collection it will stay on your report for 7 years. If you pay it off your report will show a collection judgment against you with a result of "satisfied" or "paid" -

However a friend of mine was able to raise their score a tad higher than 10pts by never dealing with the collection agency at all. Not even to make a payment arrangement or return a phone call. Instead they mailed a check out of the blue to the original lender. After a week went by he called the original lender and said that he paid the account and couldn't understand why a collector was after them - right after that phone call the collection agency stopped.

It showed up on his report that it was turned over to collections, BUT he disputed it and got it changed. In his dispute he said "Invalid remark. Debt settled directly with lender." and provided a copy of the check made out to original lender as proof that he never dealt with a collection agency. The credit bureau's investigating it must have verified his dispute and they removed the negative COLLECTION remark, but he was still marked paid late - or something. Still instead of going up only 5-10pts he said in the following month he tipped the 600 Fico mark from a score of 588.