Will paying off two revolving accounts in collections that are both three years old help to raise your credit score?

Answer 1

Oh yes! Anytime you can pay off derogatory credit it will raise your credit rating. How much is the unknown. And the prospective lender can and frequently does require you to pay off the old debt anyway. There is a craziness in official scoring that means paying off could have a detrimental effect on the score, but that is true for maybe 6 months. Most importantly it is happening in what might be the more junior and mechanical part of the process of actually approving a loan... many more things will actually go into it than the credit score. So, lets see, if I was a lender, now and 6 months (or even 5+ years)in the future, as how trustworthy do you think I would comparatively rate these two, or desire them as customers: 1) He has not made payments on his previous promises. He still owes others money that he doesn't seem able, or maybe it's interested in, paying. They probably have the right to seize what he owns, or makes as salary in the future. Salary/money, which if he is actually intending to pay me (unlike anyone else it seems), is what he might have expected to pay me with! And those others want to get repaid, and will have a right to an amount that will continue growing by fees and interest charges, so his expenses are actually higher already than he's telling me. I can require he pay off those old debts I guess, but especially if he basically uses my money to pay those off, do I really want to be in the shoes of those he isn't paying now? 2) He seems to have had a tough period and missed payment obligations for some reason, (but that was XX ago / there is an explanation in credit file). Gotta' say s/he really wanted to stay responsible/honorable and worked through it, made good on his promise overall and paid them. He doesn't seem to owe others now, at least not more than he seems able to pay on what he's making.... I don't know about you...but not only would I'd sure have to rate #2 MUCH HIGHER, I'd avoid #1 like the plague!