Does paying charge off accounts help raise fico score?

[Sherilyn]

I’m 26 and my credit score is really bad – mid 550s.

I have an old $2,200 medical bill from two years ago, and another $900 outstanding credit card balance from four years ago. Both of these accounts have been charged off and sent to collections.

If I pay off the accounts, will it raise my FICO score? Should I pay them or leave it as is?

[Tracy Winters]

It doesn’t raise fico score

A charge off is one of the worst things that can happen to your credit score and credit report.

Paying off a default account in itself will not remove it and will do very little improve to your FICO score. If you pay or settle the account, at best it will get updated to a Paid R9 charge off status with a $0 balance…..a tiny bit better but still bad.

A much better way to raise fico score is to negotiate a settlement in which you agree to pay all or some of the account in return for the collection agency removing the charged off account from your credit report.

See why-pay-off-debts.html and how-to-pay-off-debt.html for a more detailed explanation.

Just remember to have them send you the terms in writing before you pay them.

[Author]

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