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Don’t Pay Collection Accounts on Your Credit Report. Here’s Why...

Collection accounts are typically the biggest reason for a person’s decrease in credit score.

Let’s first define what a collection account is. A collection account is a bill that is unpaid by a consumer and then bought by a collection agency. This happens when a bill/debt becomes past due and at a point the company will write off the debt. Another name is a charge-off which is the same thing, except the company does not sell it to a collection agency as the debt owed stays in house.

Sometimes collection accounts and charge-offs get reported to the credit bureaus who add this account to your credit profile.

One new collection account on your credit report can cost you upwards of 100 credit score points.

When you have a collection, the logical thought is to pay it, right? This is common thinking, but, NO!

You must make sure that paying this collection account will not negatively impact your credit score.

Why would paying a collection account not fix my credit?

  1. Paying collections do not automatically remove them from your credit report.

  2. The balance of a collection account on your credit report does not matter when it comes to your credit score. You can have a collection account with a $0 balance of a $10,000 balance – regardless of the balance it is still a negative account.

  3. Paying collection accounts that are already on your credit report, can restart the statute of limitations. This means that the collection account appears to be more recent which will have more of a negative impact on your score.

So, what do I do?

  • Gather all documentation from the creditor and collection agency and send to an attorney to review.

  • Check your credit report & figure out of if the collection account is being reported to your credit.


If it is on your credit report, here are your options:

  1. Dispute the account, THE RIGHT WAY. Do not dispute online or over the phone. Write a letter to each credit bureau or hire a credit repair agency to do this for you.

  2. Negotiate with the collection agency to get them to delete the account from your credit report if you pay them. You can also hire a reputable credit repair agency to do this for you.

  3. Do not pay the account and wait for it to reach the statute of limitations when it should then be automatically be deleted, typically this is 7 years.

If it is not on your credit report, here are your options:

  1. Pay the collection account before it gets to your credit report.

Not paying the collection may lead it to be reporting on your credit report which will cause a huge dip in your score. This blog has a guideline on how to pay collection accounts.


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