Can You Increase Your Credit Score by Paying Off Collections?
6 Min Read | Published: June 20, 2025
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Learn how and when paying off collections could increase your credit score and see which factors influence how much your score may increase after paying.
At-A-Glance
- A collections account appears on your credit report when a creditor or lender reports a payment that’s in default. This can be for an unpaid debt that’s 90 or more days late.
- Popular credit scoring models can treat accounts in collections differently. Some may overlook small debts or medical collections.
- Paying off your collection debt could help improve your credit profile in some cases, but this will depend on the debt in question and the credit scoring model that’s being used.
Whether a debt collection agency has contacted you or you’ve recently seen a collections account entry on your credit report, know that your credit scores can bounce back with time.
Paying off collections could help improve your credit scores in some cases, but factors including the type of debt and the scoring model often dictate how much improvement you’ll see. Keep reading to learn what an account in collections could mean for your credit, when paying debt makes the most sense, and steps you can take to help protect your credit profile long-term.
What Is an Account in Collections?
Having an account in collections may mean that you have an unpaid bill that’s over 90 days late and has been turned over to a collections agency or in-house collection department. This may have a negative impact on your credit report.1 If you end up having a collections account, you might also experience frequent phone calls, emails, or letters from the collection agency urging you to pay. While some lenders may not report all of your late debts to a collection agency, paying all of your bills, including past due ones, is still in your best interests.
How Collections Affect Your Credit
Lenders or their hired third parties could report your collection accounts to one, some, or all of the major credit bureaus. When a collection account does show up on your credit report, it can take up to seven years to fall off if it’s not paid.2 However, depending on the scoring model that generates your credit score and the amount and type of debt in collections, the severity of negative credit effects could vary.
Here’s a general breakdown of how popular scoring models may treat accounts in collections:
- FICO Score® 8
The FICO Score 8 model usually treats paid and unpaid accounts in collections the same, so paying them off after they appear may not affect your credit score either way.3 - FICO Score® 9
Fico Score 9 could interpret unpaid third-party collections negatively, but paid debts don’t typically have a negative effect.4 - VantageScore®
VantageScore 3.0 and 4.0 overlook small debts in collections and don’t include paid collections when generating scores.5
Does Paying Off Collections Increase Credit Scores?
The scoring model and debt type may influence how much credit scores increase after paying off collections:
- Small Debts
If your collections account totals less than $100, paying it off won’t affect FICO Score 8, FICO Score 9, or FICO Score® 10 scores since they ignore small debts of this size.6 - Larger Debts
You may see positive effects with FICO Score 9 if you pay off larger third-party collections, including medical bills.7 - Medical Debt
The latest FICO scores weigh unpaid medical debt less than other collection accounts, while VantageScore 3.0 and 4.0 usually overlook both paid and unpaid medical collections.8
Are There Other Benefits to Paying Collections Debt?
There are instances when paying off collection accounts could benefit you beyond directly impacting credit scores. Here are a few benefits of paying off debts in collections:
- Loan Preparation
If you’re preparing for a mortgage or car application, paying off debt in collections might improve your approval odds, as it could benefit your debt-to-income (DTI) ratio. - Legal Issues
Paying all of your bills, including debts in collections, can help you avoid legal repercussions like garnished wages or a lawsuit. - Mental Health
If the bills affect your mental health, reducing debt when you have the means might help you feel more relaxed.
How to Pay Off Collections Debt
You can follow these steps to help you pay off your accounts:
- Verify the debt.
Confirm the debt belongs to you and request verification if necessary. You can also contact the collector and try to negotiate a lower bill. - Assess your finances.
Analyze your budget to understand how much and when you can afford to pay. Be aware that partial payments may reset the date of the debt, extending the timeframe for debt collectors to take legal action against you.9 - Keep records.
Make and track the payment so you know when it arrives.
Can You Remove Collections From Credit Reports?
While you may be able to remove negative items from your credit report, they may have to be inaccurate. If you notice incorrect information on your credit report, you can take the following actions:
- Gather supporting materials.
Collect applicable evidence, like bank statements, checks you wrote to settle debt, or invoices. - File a dispute with the credit bureau.
You can begin filing a dispute with the corresponding bureau by mail, phone, or online, and you should include the documentation disproving the incorrect entry. - Contact the collections department and the original lender.
Contact the collection agency or the original debtor who filed the entry and request that they correct the mistake.
Monitoring Your Credit
Settling your debts might help you attain better credit, but so can other responsible borrowing behaviors like keeping low or no balances and making other payments on time. After attempting to remove collections from a credit report, remember that regular credit report check-ins are still crucial for sound credit standing. American Express® MyCredit Guide can help make checking your credit score and report convenient and quick.
Frequently Asked Questions
The 777 rule, sometimes known as the 7-in-7 rule, refers to how often a debtor can contact you over the phone. According to the rule, a collections agency can’t call you more than seven times within seven days or call again within seven days after speaking with you by phone about the debt.10
A debtor can pursue you for payment until the debt’s statute of limitations expires. Expiration can vary from two to twenty years, depending on the state and type of debt.11
Debt collectors are not allowed to contact you at inconvenient times, such as early in the morning or later at night, unless you permit them to do so.12 Debt collectors also can’t lie to you to get a payment or discuss your debt with anyone other than you, your spouse, or your attorney.13
The Takeaway
While having an account in collections isn’t always the end of the road for your credit score, understanding how different scoring models respond to various types of paid and unpaid debts could help you make more strategic decisions. Staying ahead of the collections debt that seriously affects your credit could start with partial payments, keeping track of the payments you make toward debts in collections, and monthly credit report monitoring to help ensure accurate updates to your credit history.
1,3 “Can Paying Off Collections Raise Your Credit Score?,” Experian
2 “How to Find Out What Debts You Have in Collections,” Experian
4,7 “FICO® Scores Versions,” myFICO
5 “What is a VantageScore?,” Business Insider
6,8 “What Types of Debt Can Go to Collections?,” Experian
9 “How to Pay Off Debt in Collections,” Experian
10 “What is the 7-in-7 rule with credit card debt collectors?,” CBS News
11 “How long can a debt collector pursue old debt?,” Bankrate
12,13 “8 things debt collectors can't do,” CBS News
Liv Gillespie is a Philadelphia-based writer with a double M.A. in English Linguistics & Literature and Secondary Education. Her work focuses on personal finance.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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