Paying off closed or charged off accounts


Dear Experian,

Does paying off a closed or charged off account raise your credit scores?



Dear TYC,

Paying a closed or charged off account will not typically result in immediate improvement to your credit scores, but can help improve your scores over time.

If the creditor has not sold or transferred the debt to a collection agency, the charged off account will still report the balance owed. Once the balance is paid, the account status will be updated to show “Paid Charge off” and the balance will be updated to zero.

Often, when an account is written or charged off, the creditor will sell the debt to a collection agency and the balance on the original account will be updated to zero. If so, you no longer owe the balance to the original creditor, but to the collection agency. If this is the case, paying the debt to the original lender will not result in a change to the status of the original account. Paying the collection agency will result in the status of the collection entry being updated to “Paid Collection.”

Paying an outstanding debt is always better than not paying it, but how much it will affect your credit score (if at all) really depends on other factors in your credit history. For example, if you have too much outstanding debt, then eliminating that debt will have a positive impact on that factor.

While your credit scores may not improve immediately, paying the debt in full will help reduce the negative impact, resulting in scores improving over time.

Thanks for asking.

The “Ask Experian” team

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