I recently paid off all credit accounts that went to collection agencies. Was this a mistake? Will my score increase as a result of this ?
Hi, @jweightogo63, and welcome! Paying off collection accounts will help with some types of credit scores, such as the latest version of the FICO score (FICO 9) and the credit score you get through NerdWallet, which is a VantageScore. Both scoring formulas ignore paid collections.
Those scores aren’t the ones typically used by lenders, however. The most commonly-used score is the FICO 8, which ignores collections under $100 but still counts other collections, paid or unpaid. Mortgage lenders use an even older version of the FICO, which counts all collections.
What paying off collections does typically do, though, is prevent creditors from filing lawsuits against you – and that’s no small thing. If you’d like other advice on rebuilding credit, please let us know. We’re always happy to help.