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Falling behind on bills damages your credit — and the later your payment is, the worse things get. If it has been 90 days or more since your last payment, your lender may have sent your account to collections.
A collections account then appears as a tradeline on your credit reports. This tells potential lenders that you've missed payments, which can be a red flag when you apply for credit.
Collections accounts can affect your credit scores, but how much depends on the scoring model and the type of debt. Both FICO and VantageScore consider collections when calculating scores. However, some newer scoring models don't continue to penalize you once collections are paid.
Medical collections make up 57% of all collections on consumer credit reports, according to the Consumer Financial Protection Bureau. Other common types of collections include rental/leasing, utility, and telecommunications.
While it might be tempting not to pay, there are some good reasons to pay off an account that’s in collections. Here's what to consider.
Paying won't take a collections account off your credit reports
Many people think paying off an account in collections will remove the negative mark from their credit reports. This isn’t true.
If you pay an account in collections in full, it will show up on your credit reports as “paid,” but it won’t disappear. In fact, you should expect it to remain on your reports for seven years.
The only exception to the seven-year rule is medical collections: All paid collections have been removed from credit reports, leaving only unpaid medical collections of $500 or over.
This means that an account could affect your credit score, the three-digit number used to judge your creditworthiness, for that length of time. The sharpest drop to your scores will happen when the account is first reported to the credit bureaus as in collections, and then the damage lessens over time.
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Paying off a collections account could help you in other ways
Focusing solely on the damage done to your credit scores can make you miss the other benefits of paying a debt that's in collections. Here are some ways paying can help you:
You'll avoid legal action
If your debt hasn’t yet passed the statute of limitations, the collector could sue you for the money you owe, perhaps leading to wage garnishment. Paying off your account in full will help you avoid going to court.
You'll stop the debt collection musical chairs
Unbeknownst to many consumers, debt collectors constantly buy and sell accounts. Paying your debt prevents it from being sold to multiple collectors and complicating the payback process.
You'll avoid additional interest and fees
It’s complicated, but in most states collectors are allowed to keep charging you interest and fees after they’ve purchased your debt. Paying quickly can keep this to a minimum.
You'll look better to lenders
Once an account in collections is marked as “paid” on your credit report, you might have a better shot at getting another loan.
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- 1. CFPB. Debt collectors re-evaluate medical debt furnishing in light of data integrity issues. Accessed May 6, 2026.
