The Truth on Paying Collections


Why do your credit scores drop when collections are paid?  That’s right, fact is stranger than fiction. We have reviewed credit reports that scores have fallen from a few points to well over 100 points after paying just one or multiple collection accounts to a zero balance. So here’s the other question.  How does one avoid damaging their credit scores while trying to pay their past due bills?  Be sure to continue reading this article to learn more.

Our society has taught us that if we pay our bills that all will be well. And that should be the truth, but not necessarily when it comes to collections listed on your credit report. If the collection is not listed on your credit report, then paying it will not have any affect on your credit scores. (but that’s a different blog for a later date).


Why you should be concerned about paying debt collection companies.  May times you may not owe the collection or at least the amount that they are attempting to collect.  WHY?

  • The debt collector may not collect more than you owe.
  • The debt may be too old to collect.
  • The statue of limitations for collecting debt varies from state to state, but Alabama is 6 years from the last payment made.  If no payment was ever made, then it is probably when the debt first occurred.
  • It may belong to someone with the same name as yours.
  • It may have been filed incorrectly with the insurance and you may owe something but not all of what the debt collector is trying to collect.
  • The U.S. Fair Debt Collection Practices Act says collectors can add fees or interest only if the amount is “expressly authorized by the agreement creating the debt or permitted by law.”

There are several reasons why it may not be yours.  Did you make a debt with the debt collector? No you didn’t, but they can legally purchase or collect on the debt as a third party, but you have the right to validate that the debt is completely correct and is yours.


ReScore Solutions validates debts and balances all the time for our clients.  We are very successful in getting debt collections removed from credit reports and most of the time our clients will never have to pay them.  No, we aren’t trying to help people avoid paying their bills, it’s just that you have the right to have the debt validated and pay only what you owe.

If I called or sent you a letter and said that you owed me $500, would you just pay me?  If you have never done business with me you need me to prove that you owe me.  The same principle with paying a debt collector.

So a you may get a tax refund and decide to repair their credit by paying all those collections that are reporting on your credit reports.  The feeling is great to get all those collections paid, but short lived when you apply for an auto loan, mortgage, or credit card and told that you are declined.  I can hear you now, “But, but, but I don’t understand, I have paid all those negative accounts on my credit reports.” Guess what?  It’s actually surprising to learn that paying off collections will actually lower credit scores.

credit mistakes

Here’s why….

Collections are usually reported on the credit as a “9” status or collection account. This means the account has already been “written off” and assigned to collections by the creditor.  Once an account is reported this way on the credit report, the damage to the credit score is irreversible, unless that item is removed completely from the report.  That’s where our services are so valuable.  We handle all of this for you and watch for any violations of the Fair Credit Reporting Act and the Fair Debt Collect Practices Act.  These laws are very powerful and are working for you.

If the account is paid off, the collection company will report that the account now has a $0 balance, but usually will not delete the item off the report.  It’s actually legal for a debt collector to continue to report a paid collection.  The account has already become a collection, and the risk of the consumer defaulting on another account is already very high, due to that collection.

So your credit score will not go any higher if it is paid off, because paying off a collection after the fact, doesn’t lower the risk of defaulting in the future.

However, the DATE OF LAST ACTIVITY is updated to the date the account was paid off. So if that account was sent to collections 3 years ago, the date of last activity is 3 years old and the impact to the credit score is not as much.  But if you, the consumer pays off that collection today, they just update the date of last activity to today’s date, sometimes causing the scores to go DOWN as a result.

Crazy isn’t it? You are trying to do the right thing and pay off collections, but your scores can be lower as a result.

ReScore Solutions is very successful in getting paid and unpaid collections removed from credit reports and many times our clients will never have to pay them.  We use a factual dispute process to get these removed.  We get far more collections deleted than not. But when the collection is properly validated, we can help our clients work with collection companies to have their negative item removed completely from their report, if they pay it off.  This will help their credit while satisfying the collection company.

Click Here to help understand how Bob got his credit improved.

Fill out the above form to have a sales representative contact you about getting started with getting your credit back on track.  You pay after work has been completed and we have payments as low as $100 a month for individual and discounts for couples.

family in safe neighborhood
Financial peace of mind….good credit.



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