An unpaid balance of yours has been delinquent for so long that it has gone into collections, and your credit score has taken a significant drop. You are now getting calls and letters from the collection agency that currently owns the debt, and you are wondering if you can improve your score by paying the balance. At this point, it is possible, but it is not guaranteed.

The Status of Your Debt in Collections

credit score, credit balance, auto finance
If you have an unpaid balance that has been purchased by a collection agency, there are two things that you should know about this account.

  • You no longer owe the original creditor. As a charged off and sold account, your balance with the creditor will be brought to "0." However, because the debt was never paid, it will still stay on your credit report and negatively affect your credit score for 7 years.
  • You now owe the new owner of the debt, the collection agency. This agency may have purchased your debt for pennies on the dollar, and now they will be attempting to make a profit by soliciting the amount that you owe (or, in some cases, they may settle for part of the total). Just remember that you will be paying them and not the creditor.

When You Pay a Collection Agency

You can pay the balance that you owe to the agency in one lump sum, or they may break the amount down into installments. And once they have been paid in full, they will bring the balance that they have on record for you down to "0."

After this happens, they may have the debt removed from your credit report (which will increase your overall score) or they may not. You can ask them to have the amount removed, but there is no certainty that they will comply with your request. If this happens, the charge-off/collections "event" will remain on your credit report for 7 years, but at least the balance that had been owed will be marked as "paid."

Not Paying the Collection Agency

Even if you ignore the requests from the collection agency, the debt will only remain on your credit report for 7 years. So, if the debt is old enough (5 years +, typically), many people may choose to wait out the remaining time.

This will only work if you are not planning to make a big purchase until after the statute of limitations for the debt has run out. Otherwise, your ability to get a loan will be highly compromised.

Stop the Harassment

If you are currently being bothered by a third party collections agency and you would like for the calls to stop, our affiliate can make that happen. Visit the page to find out how you may even be entitled to cash compensation if your consumer rights have been violated.

Reclaiming Your Good Credit

If you want to improve your credit score and acquire reliable transportation for your everyday needs, Auto Credit Express can help you to get approved for an affordable auto loan. Regardless of what your credit looks like, we can find a solution that works for you.

Just fill out our fast and secure online application to get started today.