Whats is more important to a credit rating, paying off current credit cards or debt that is in collections?

Question

Whats is more important to a credit rating, paying off current credit cards or debt that is in collections?

Answer 1

Accounts in collections are reported separately as delinquiencies.  You should definately pay them off first if you are trying to help your credit score.

Answer 2

Paying current credit cards is better, that way you don't make the problem worse by letting more debts go into default, you might want to also read this article on repairing your credit, http://www.monitorbankrates.com/how-to-b...

Answer 3

Paying off current credit cards.  Paying off the collections will not make them go away and will have a very small effect on your credit score.  You might want to dispute those collections with the credit bureaus.  I did recently and had a three removed.  My score rose 25 point per collection agency deleted.  I found a good method for getting results with your disputes at http://www.creditforums.org/f13/got-my-r...

Answer 4

Ok, and now for REAL answer.

This is what makes up your credit score:

1. Payment history- 35%

2. Total debt owed to available credit ratio-30%

3. Length of time establishing credit-15%

4. Types of credit established-10%

5. Inquiries and New accounts-10%

Current accounts should ALWAYS be taken care of first, as it's the only thing that's building credt, factors 1 &2, especially. Depending on how old the collection is, it's really not going to have that much of an effect, since the collection account has already affected the score as it is. Unless you negotiate a pay to delete, it will not make that much of a difference to the rating. Collections older than 2 years do not have anywhere near a negative effect on the rating.

Answer 5

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Answer 6

Don't dispute a debt you know is yours. If the collection agency proves to the credit bureau it's yours, you will be in serious trouble.

It's all very important. The longer you wait to pay off collections, the longer it stays on there. It will look bad that you let them go. Continue to pay your current credit cards, keep them 30% under the credit limit, and apply monthly savings to the collections. Your credit will always be affected negatively with the collections.