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With three accounts in collections can you raise your FICO score quicker by paying them off in full one by one or by making payments on all of them?

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2006-02-18 22:23:23
2006-02-18 22:23:23

Paying off collection accounts in no way improves your credit and may, under certain circumstances, HARM it by lowering your scores. Once an account goes into default, it is a derogatory mark against your credit. The derogatory nature, PLUS the "date last reported" combine to cause deductions to the score, even if the account has been paid off. If the date last reported falls within the past 12 months, the deduction can be huge. In the simpliest terms, a credit report is a history of how you have managed debt in the past. So, obviously, the recent past (last 12 months) has the most impact on your scores. Any derogatory mark falling within that time frame is a "score killer". This is the reason that paying off old collection accounts don't help your credit. They often cause the account to (confusingly) appear to be more recent. The only true way to improve your credit is to pay a collection account in exchange for its' REMOVAL from your credit. Unfortunately, this is not easily accomplished. However it is still worth the effort because that is the only way to actually improve your credit by paying defaulted debts.

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