Paying off old cell phone bills

[Lexy wubben]

I have two old cell phone bills that went to collection about 2 years ago, when I was in financial difficulties. I plan to pay them off next week. Once I do, the accounts are considered as “accounts in good standing“, right? So can I expect my score to increase?

[Luis]

Not entirely true
Paying off any non credit card defaults such as unpaid utility/cable/cell phone/medical bills usually improves your credit score, but not immediately.

Your credit report will show the accounts as “PAID” with a $0 balance. However, these accounts are collection accounts which are considered as negative information by FICO, paid or unpaid. The accounts will remain on your credit report for 7 years from default.

Regardless of what it does to your FICO, paying the accounts is the right thing to do. You save yourself from being sued, and if you plan on asking for new lines of credit in the next 5 yrs you’ll need to pay them anyway because most creditors require all past debts to be fully resolved prior to getting new credit.

See How to pay off debt for important information regarding how to deal with debt collectors.

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