Does paying off a collection improve credit score?
You would think that by paying off a derogatory account, such as a collection, your credit score would improve. but that is not always the case and actually unlikely. By understanding how the credit bureaus analyze your credit and determine a score you can understand what happens to your score when you pay off a collection account. Credit bureaus look for the type of credit you have and the activity of that credit. So if you have an old collection account that you would like to pay off, the impact that collection account is likely minimal since it has not been active for quite some time. When you pay off the account, the credit bureaus are updated to show a $0 balance but the activity date is updated to that day. This now shows as a derogatory account with recent activity, therefore lowering your score. The exception to this would be a newly opened/active collection account that is paid off. A collection account with a recent activity with a balance looks worse than a collection accoun
