Does Paying Off a Collection Increase Your Credit Score?

One of the biggest questions that we see when people are trying to improve a bad credit score is this one:

Does paying off a collection increase your credit score?

The short answer to the question is yes, you can potentially see an increase of a few points or even more when you pay off an account that’s listed under collections on your credit report. And if that’s the only collection account on your credit report? Then your score could increase by more than just a few points.

For example, one of our clients has a single medical bill on her collections list. Every month for years, she’s made a small payment on the account, and slowly but surely she’s getting it paid off. Now, while there’s still a ways to go toward paying that account off, every few months she sees a slight increase in her credit score because that collections balance has decreased. In her case, I would full expect a larger jump in her credit score once that’s paid off, not only because it’s paid off, but because there is a good payment history to back up her efforts to settle that account.

But, if you’ve got several, or even quite a few collections accounts on your credit report, then you probably won’t see much, if any, of an increase in your score should you pay off one of the collection balances. It will likely take paying off several or even all of your collection accounts to see any real improvement in your credit score, especially if the balances are very high, very old, and show no real efforts to pay them off.  Still, don’t let that discourage you.  The only way to see real improvement in your credit score is to keep plodding forward, paying off accounts, and proving your creditworthiness.