Contrary to what most consumers believe, paying off a collection to collections can actually harm your credit. Negative marks on your credit report can stay on your report for up to seven years, and if the collection is completely removed, your score might not even improve until the record is removed. In addition, you will have to pay off the full amount, even if you never borrowed the money in the first place. This means that the only way to avoid this problem is to pay off the debt in full.

The first way to manage a collection’s impact on your credit score is to make sure that all payments are made on time. A good rule of thumb is to consider the largest of negative items – if it adds up to more than two payments a month, you should contact your creditors immediately and work out an arrangement. Creditors understand that you may be having a difficult time making your payments at the moment. If you can add to your payments, they will be less likely to report late and negative items to your credit report. If you only make one payment a month, this will not cause any adverse changes to your scoring model.

If you have multiple debts with large amounts due, it is important to first calculate the total amount due and compare this total with your current monthly income. If you find that you are unable to make all of your minimum payments, consider taking out a cash loan to cover the deficit. You should use a reasonable interest rate for this purpose, because most debt collectors target people with poor credit scores. You should also remember that when you are working to improve your debt score, you should not be adding to the problem by paying off collections that are already past due.

If you have several time-barred debts due, and they have accumulated a significant balance since you first became delinquent on them, you may consider paying them off individually. If each has a low balance, you should be able to borrow this amount using a reasonable interest rate from a lender. Once you have paid off the primary delinquent account, you can refinance to a new credit card at a lower interest rate. Paying each of these accounts separately can take a long time, but it can also help rebuild your credit history and increase your score over time. By paying off each of your past due balances, you will also show creditors that you are responsible when it comes to meeting your financial obligations.

Once all of your debt is paid in full, you may want to consider paying off the highest interest debt first. By paying off the highest balance, you will effectively be erasing the prior debt from your reports and will also be reducing your overall debt to credit ratio. This reduction in your ratio can take years off your score, which means it could help improve it even faster. If paying off the lowest balance accounts first makes financial sense for you, it is recommended that you do so.

Another option when it comes to paying off collections is to use a debt settlement. Debt settlement works by paying off the balance without actually settling with the creditor. Instead, the settlement company will make a lump sum payment to your creditor and then advise you on how to legally eliminate the account from your credit report. Using a debt settlement company can help get rid of collection accounts that may be hurting your credit score, but if you decide to use this process on your own, be sure you completely understand all of your rights.

Finally, if you find yourself with multiple debt accounts that are causing you financial stress and are unable to repay them, you may want to consider bankruptcy. Although this method does not remove the debt from your reports, it can hurt them. Not only will your creditors be notified that you are filing bankruptcy, but your credit bureau will no longer give you any positive information on future purchases. Also, your credit rating will drop drastically and this can take years to repair. So, if you have tried other options, or even bankruptcy, think twice before you take this drastic measure.

So, now that you know some of the reasons why paying off collections may be an option for you, be sure to check your credit report and make sure all collection accounts are removed. If they aren’t, then you may want to consider using one of the options mentioned above. But remember, once you have paid the accounts off, make sure you don’t start collecting. The best way to avoid collecting is to pay off the debts as quickly as possible. This will increase your credit score, which will help you in the long run.