What does paying a collections account do for your credit?

Question

I have quite a few (about 12) old credit accounts that have been charged off to collections, and I would like to, sometime in the not too distant future begin to clean up my credit. If I were to pay off or settle on any of these accounts, who should I contact and pay? I am contaced by collections agencies for all of them, but all but one is still listed on my credit report under the name of the original creditor. I don't want to agree to pay a collections agency only for them to tell me, "Oh well we are only contraced by 'fill in the blank" credit card company, we don't have the authority to remove or change their listing." Anyone have some good advice for how I can make sure that any payments I make would acutally improve my credit?

Answer 1

Just paying a collections account does nothing for your credit. It will still be listed as a paid collection which is unfortunately just as bad. You need to work on getting these deleted.

Some companies will agree to delete the entries on your credit report when you pay but you have to ask for it and you must get the agreement in writing.

For good advice on how to handle these accounts go to CreditBoards.com. They have great information and the people in their forums are awesome and always willing to help.

Answer 2

I agree with the first 3 posters and Delaina is correct that paying a negative will not help if it is not deleted but instead shows as a paid negative.

A negative is still a negative and when it is paid it will be updated to reflect the payment which will make the account "look" newer than it actually is. Depending on your credit file, it could actually take several years for it to age and hurt less.

The site that Delaina listed is also an excellent credit discussion board.

A creditor or collection agency "cannot" change any information or delete a tradeline that is not their own listing. If you pay the collector they cannot touch the original creditors tradeline.

For your protection, when dealing with either the collector or original creditor, do everything in writing and sent certified mail return receipt - stay off the phone.

Answer 3

Call each of the creditors that you owe and ask them how they prefer you handle it. Creditors and collection companies work together. But the payment must be received by the creditor for them to remove you from the collection list. If you send it to the collection company they will in turn mail it to your creditor so the process takes a little longer. If you mail it to the creditor they get the payment faster and then are responsible for reporting it to the collection agency. Some creditors will not deal with you at all after your account is placed in collection. You will have to deal directly with the collection company on these. Either way you will need to keep updated on the status yourself. I have worked with some companies that after an account was cleared up it took them months to just make the call to clear it up with collections. I think the law may be within 30 days your credit must be updated but I'm not 100% sure on that. Either way, whoever you deal with see if they are willing to settle for less. A lot of times there are late charges on there that many companies are willing to write off just to get the debt settled and off their books. Good for you though taking care of this. Your credit may still show as slow to pay but you are well on your way to a better credit score.

Answer 4

Contact the original person you owe and explain that you are trying to pay off this debt and they may lower the payoff and then make sure and ask them to report when you do pay so it will reflect on your credit report.