Credit Report & Scores » Report Advice » Collections » Benefits of Paying a Collection Account

Benefits of Paying a Collection Account

Dear Experian,

I have a credit card account on my report that has gone to a collection company and was written off by the credit card company. If I make a deal with the collection company to start a payment plan and pay this off, will it affect my credit in a positive manner or is it too late for that? Also, does the collection company have to report the timely payments to you to show it is being paid?


Dear SCH,

Once an account has gone to collection, it will remain on your credit report for seven years from the original delinquency date. Paying off a collection account will not remove it from your credit report, but lenders may view a paid collection account more favorably than an unpaid one. Additionally, some of the newer credit scoring models do not count paid collection accounts in their calculations, so paying off a collection account may have a positive impact on your credit scores right away.

Collection accounts don’t typically show monthly payments. However, when it is completely paid, the account status will be updated to show that it is paid and that you no longer owe a balance.

A Paid Collection Looks Better Than an Unpaid One

Even if the credit score being used does count paid collections, a paid collection account may have marginally less negative impact on scores as time passes than an unpaid collection, so your credit scores might recover a little bit more quickly if the collection is paid.

A paid collection account could also be helpful when making a large credit purchase, such as a car or a house, when your credit history can be reviewed manually. Although the collection account may still negatively affect scores, the fact that it is paid might be seen as favorable by your lender for at least a couple of reasons.

First, you no longer owe the debt, meaning you have more funds available to make payments on the new loan. Second, you demonstrated responsibility by paying off the debt, giving an indication that although you had credit management difficulties in the past, you have since overcome them.

Thanks for asking.
The “Ask Experian” team