Paying off your collection accounts will not assist you to improve your credit score. You must follow it up with a deletion of that account. At least, a deletion will guarantee you that this account activity will not show up in your credit history.

Every borrower wants to improve his/her credit score by using all means available to them. Payment of collection accounts may or may not improve your credit score. The trickiest debts to deal with are those that have moved to collection accounts.

Why it does not improve your credit score

The reasons why collections are this way and could not raise your credit score is that paying off these debts activates your credit history and will add a negative rating. For example, if you pay a collection account that is five years old, it becomes a disadvantage to you and your credit rating. Payment of this debt will mean that your credit health history was updated after five years. Therefore, the best option for you is to leave the collections untouched until the seven years are over from your last credit history update. This debt will automatically be removed. Therefore, paying to collection accounts will not help to improve your credit.

What to do with collection accounts

The best way of dealing with collection accounts is paying it up and asking your collector to delete the account. Do not pay this debt and keep quiet. Pay it up and request for the deletion of the same. Also, when you are dealing with a collection account, you're advised to determine the timing. For example, if you have accumulated five years since your last activity in your credit history, you are advised to leave it that way until the 7th year. After seven years, your collection account and debts will be automatically deleted.

Following the common rule with collection accounts

It is a common rule that paying off collection accounts come with deleting the accounts from debtors or collectors. You should follow up your account and ensure that it does not exist. To ensure that the account will be deleted after paying your debts, you should ask your collectors before even making payments whether they will delete the account. After making the payment, you should ask for a letter stating whether your account was deleted.

What is a credit score

A credit score is needed for you to be able to get a loan or credit. The reason behind this is because it will help financial institutions to determine your creditworthiness. They will also see every loan that you made and the payment history that you have. Find out more about it by reading the information below.

Credit scores are calculated based on the proprietary algorithm. This will include the person's outstanding debts, payment history, and the length of the individual's credit history.

Credit scores can range from 300 to 850. The higher the individual's score, the lower the risk. People who have lower credit scores are considered high risk, which will make lending companies ask for more requirements.

About Fico scores

Fair Isaac Corporation is the one who established FICO, and it is one of the most commonly used credit scoring systems today.

According to FICO, 90% of the most reputable and respected lenders today are making decisions according to this kind of credit scoring system. Get to know more about Fico scores by reading the information below.

How are credit scores calculated?

The weight of each of the five categories are; 30% of amount owned, 10% is for the new credit, 15% accounts for the length of credit history, 10% is the credit mix and the last 35% accounts for the person's payment history.

The FICO score takes into consideration positive as well as negative aspects of the credit report. The percentage or the weight of any of the categories mentioned above may differ from a person to another depending upon the information available in the credit report.

The FICO score takes all of the information from your credit report. However, the banks or any other lending institution might look at your income, type of credit and employment history when you apply for a loan or mortgage.

Once a certain lender asks for a client's credit report, they can also ask for the Fico score. Other sources say that your Fico score will include 35% of your payment history, 30% of your credit utilization, and 15% as to how long have you been borrowing.

Explanation of credit score ranges

It is important to know the category that you fall into when it comes to credit score for you to be aware. The range of a credit score can go from 300 to 850. Always remember that the higher your score, the higher the chances of you to qualify for a loan. There will also be instances where a financing company is okay with 650 scores, while the other is fine with a 750 score. It will all depend on the lender itself.

A lender or a bank will check your credit score if you qualify for the application that you are requesting. Here are some of the credit score ranges that you should know.

Bad credit score

People with a credit score below 579 is known as high risks. Foreclosures, poor payment history, and bankruptcies are the reasons why people fall into this category.

Good credit score

A good credit score ranges from 680 to 719. People with this credit score can expect approvals and interest rates that are better.

Very Good

A very good credit score ranges from 720 to 799. People with this credit score is known to be small risks, and they often get loan amounts that are higher than usual.


An excellent score ranges from 800 and above. Financial freedom is expected to people with this score.

Things you can do to improve your credit score

Having a bad credit score is similar to having poor health. Therefore, you need to take measures that ensure you are continually improving on it. The most efficient way of repairing bad credit is good management over time. Improving your credit score is necessary for you to be eligible for better terms and rates for loans in the future.

Regular credit report checks

You are advised to monitor your credit report regularly to see if it has any errors. A credit report brings you up to speed on your status as a debtor. Ensure that the payments are reported correctly and the amount owed to each creditor is correct. Errors must be disputed to your credit bureau promptly.

Reduce your debt

Most people usually take loans just because they are eligible for them without considering the potential damage to their credit score. For a start, you can reduce your reliance on credit cards. Design a plan that ensures you give priority to your debts that have the highest interest rates.

Payment reminders

If your monthly premium is not automatically debited from your account, you need to set up a payment reminder. Timely credit repayment improves your credit score over time. Some financiers usually send emails or texts to their clients to make payments.

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