Paying off Collections and Credit Report

As far as our credit score is concerned, should we try to pay off older collections (ex. a couple years old)? Or has the damage been done and it wouldn't really be to our benefit if we aren't able? If we did pay them off, how long would it take to improve our credit score? Thank you.

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Unfortunately, paying off your collection accounts won't help your credit scores directly. These accounts are considered negative whether they are paid or unpaid. However, paying them will mean you won't have to deal with any more phone calls or letters, and you may avoid a lawsuit over the debt, which could result in additional credit damage.

In addition, there are some instances where you have to pay off a collection account in order to get a loan. For example, some mortgage lenders require that you pay off certain collection accounts first.

One thing worth noting here: Since paying off these accounts won't likely improve your credit scores, you can feel free to settle them for less than the full balance if you can't afford to pay off the entire amount. (Get any agreements in writing first, of course.) That will stop the collectors from contacting you about the debt or pursuing further action, and will help you put them behind you.

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