why will paying off accounts more than 3 months past due lower my credit score?

Question

I was looking for ways to increase my credit score on Bank of America Privacy assist (it tells you how to improve your credit), and it said that if I pay off my 4 delinquent accounts (which add up to about $1,020) it will decrease my credit score by 20 points.

Why would paying off acounts decrease my score?

Answer 1

Your score will be lower due to the history of your accounts.

Be aware that paying off a collection account,or closing an account on which you previously missed a payment, will
not remove it from your credit report. Your FICO® score will still consider this information, because it reflects your past credit pattern.

Your better off to make sure you pay them on time every month and pay more than minimum. If you can pay them off now, go ahead, but there will be no instant score improvement because history accounts for 30% of your score.

Here is a link to find out more
http://pueblo.gsa.gov/cic_text/money/creditscores/your.htm
All about FICO scoring.

Answer 2

It seems weird that this would happen with something that recent. Typically it happens with delinquent lines when they are older. Part of the credit score is th length of time since you were delinquent. When you pay on a delinquent line, it shows up as recent activity on that line, and thus gives those late payments more weight.

However, unless you need to raise your credit score ASAP, in the long run it will raise your score to pay off the delinquent lines.

Answer 3

Pay them off now. Better to get it all over with now. With 4 delinquent accounts, your score is already trashed. At least when someone looks at your report, they can see you did pay off those accounts.

If you build an on time payment history of at least 24 months, your score will rebound.

Answer 4

yes. you're credit score will lower