How does paying off a defult credit card help your credit score?

Question

How does paying off a defult credit card help your credit score?

Answer 1

Well first of all..it's paid...that's what you're supposed to do and that's what creditors want is to be paid. Even though your card went into default, once you've paid it will be marked as 'paid' on your credit report. Lenders would rather see an ultimately paid rather than never paid at all.

The score won't increase in leaps and bounds but over time.

Answer 2

If the account has gone to collections it will not raise your score at all, as a matter of fact it will actually lower it since the account will become current rather then old.

What you need to do is request a pay for delete agreement this simply says that in return for your payment they agree to remove the account from your credit report. This is the only way that paying old collection accounts will raise your score.

And do not pay them a dime until you have this in writing.

Answer 3

It will help only marginally if it is  a bill from within the last 2 years.  If it is older, it may actually hurt your score to have a new "paid collection" on your report.  If this is the case, your money might be better spent taking other steps to improve your credit score. Have you considered using one of those authorized user tradeline programs. They are very affordable and would get you well on your way to having better credit. My mom used it and not only was able to open other accounts, but her score jumped 51 points. Check out the free evaluation form at www.totaldebtsolutionsllc.com They can help.