Paying Collections Can Lower My Score… Why?

I was looking into buying a house a year ago.  The person I spoke with at the mortgage company told me a few things to improve my credit.  One of them I am unsure about.  She said not to pay anything that is more than two years old.  Do you know any details as to why she’d say this, and how true it is?

Eric

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Hello Eric,

Read: delete for payment

As a general rule, your mortgage broker got it right.  There’s more to it, though.  Some furnishers continue to update the account every month post charge off [Capital One comes to mind] and others don’t.  A collection that hasn’t been updated for two years would generally punish your credit score once paid as a result of the update.  The update is considered a recent event and is weighed more heavily than the fact that you paid the account.

This is why the pay for delete-inator service has been born.  The pay for delete-inator exterminates debt collector’s tradelines once paid – or so I am told.

Thanks for the questions and hope this helps.

Paul