Collection Accounts-if I pay it will be get deleted?
Outside of bankruptcy and foreclosure, arguably the biggest black eye that you can have on your credit report is a delinquent debt that went to collection accounts. These accounts are some sort of debt that you fell behind on, then just let escalate to the point where a debt collector took it over. Collection accounts can cause your credit score to take a huge hit. Worst of all, they can stay on your credit report up to seven years from the time you fell behind on payments. But if you pay off the delinquent account, it will be removed from your credit report, right?
Wrong. This is a common misconception that many people have. But regardless, it’s still crucial to settle any outstanding accounts that have gone to collections. We’ll explain why in this post.
So What Good Is Paying Off A Collection Then?We know what you’re thinking – if settling a collection account won’t get it removed from your credit report, then what good is it to settle it? Settling is important for two reasons:
- It prevents you from potentially being sued by the debt collector, which can result in the court ordering wage garnishment, putting a lien on your properties or freezing your bank account until the debt is settled. Lawsuits are headaches that you don’t want to have to deal with, trust us.
- Settling a debt can actually help your credit score over time. That’s right, while the collection account may stay on your report for up to seven years, the account will be marked as paid. As this information on your credit report gets older – and you maintain good consumer habits – your credit score will gradually improve the closer you get to that magic seven-year mark.