What can "PAID IN FULL" really do for you?

I am working with a collection agency to settle a four year old debt. It's for 3800 dollars.

So what are my options?

I can do the pay in full for 3800...My question is...What will this actually do to help my credit score? Because of this dept my credit is blown at 550 on just about all 3 bereaus....Would it really help to pay in full? Or should i settle for like 3300 dollars and use the money i can save to help better some of my other finances.


What im getting to is i just dont want to blow all this money to pay in full and have it help my credit by like 5 or so points...

Can someone please step up and say what their credit score did when they paid in full and how much it helped if any at all?

Any information would be great!!

The only way this will help your credit is if they will give you a pay for delete agreement, this simply says that in return for your payment they agree to remove the account from your credit.

If they do agree, do not pay them a dime until you have this in writing.

Otherwise paying old collections doe's nothing for your score, but it doe's look good to lenders when you apply for credit in the future.

Any thought to paying it in full because you owe it?

It is always better for your score to show you paid the debts off. Better late than never is a true saying. If you settle the debt for a lesser amount that will come back to haunt you later.

I've done quite a few payoffs but nothing of that amount and my score jumped 20 points. You should pay because you owe.

If you have the $3300 right now call the collection agency and ask if you can get a discount and usually they will give you one if your willing to pay. Yes its always a good idea to pay your debt on full or pay a settlement in full. I t looks good on your credit report and you won't have to worry about this again.

If a creditor is offering a discount to get payment now, you have to specify that they must report it as paid in full.

The discount they offer you is actually a forgiveness of part of the debt. It is not incorrect to say that the debt is paid in full even if the debt is reduced to induce payment.

In the outside chance that you are considering bankruptcy, it is unacceptable to pay a creditor off in order to get a discount on the debt, and thus leave other creditors unable to get the same deal.

Spiff is correct. These other responders simply do not wish to do any research on this topic.


The fact is this. As long as this debt is being listed on your credit report (paid off or not) it will have a negative effect on your credit.

To make it worse, paying it off can actually HURT your credit even worse. Here is why.

The credit scoring formula gives more importance to recent items or activity on your report. Once this item first appeared on your credit history, it had a huge negative effect. As time goes by it becomes less important, and your scores will gradually improve. After 7 years, this item will automatically drop from your history and not effect you at all.

If you pay off this debt, they will change the status this item to "paid". However, it will still reflect that it was late, charged off and in collections. Even though you paid the debt, it will still be a negative on your credit report.

Even worse, your payment now updates the activity date, turning this into a recent activity. That will hurt your score even worse.

I bet those nice collection agents didn't bother to tell you this, right?

So what to do? Demand that they agree IN WRITING that once you have paid off the debt, they will DELETE this item from your credit report. Many of them will tell you they can't do it...it's against the law. They are lying. Trust me...I've researched this.

There is no law preventing a creditor from deleting an item the placed on your report. There is no user agreement between them and the credit bureau preventing it. The ONLY reason they want to keep it on your history is to punish you for your delinquency.

Why on earth would someone pay off a debt and not have it help their credit in return? Doesn't make any sense.