Collection accounts, to pay or not to pay..that is the question.

Collection accounts are unpaid debts that are typically sold from the original creditor to a 3rd party collection company at a fraction of the original debt.  It is the collection company that then not only tries to collect on the debt but also reports the collection to your credit report.

Most collection companies report the debt every month to the credit bureaus.  This process is called “re-aging” of the collection account.  What this means to your credit score, is that it is impacted as if it were a new collection account every month.  There are some cases where the collection company doesn’t re-age monthly and the collection account can become “dormant” not impacting your credit scores as much.

It is the dormant collections that can significantly lower your credit scores once paid.  This is due to the fact that the collection company will update the account to the credit bureaus to…