Turns out paying off a collections account can actually drop your score 20-30 points

I was reading through the myFICO forums last night and someone explained how the FICO scoring models treat settled collections as a recent activity. I always thought paying off debt would help, but a guy in Phoenix said his score dipped 28 points after he cleared a $450 medical bill from 2 years ago. Has anyone else seen this happen or know the best way to handle old collections?

2 comments

2 Comments

leep337d ago

Yup, saw that exact thing happen to a buddy in Atlanta last month.

jana_miller317d ago

Pulled a similar move last month trying to parallel park my own car and ended up on the curb like a statue. Guess I'm just as graceful as your buddy.