Many consumers are surprised when they find paid collection accounts still sitting on their credit reports. Unfortunately, it's a common misconception that paying off an account in collections will simply cause it to go away. The truth is that's not always the case.
A paid collection can remain on your credit report for up to 7 years from the date it went into serious delinquent status. It's also important to remember that a "paid" collection is essentially just as damaging as an "unpaid" collection to your credit score. Both entries are considered negative marks on your credit report and are seriously frowned upon by credit-scoring models.
So, if you're in the process of negotiating a payment plan or settling an unpaid credit card debt in collections, don't forget to negotiate your credit score as part of the process too. You may not successfully negotiate a complete deletion from your credit reports with every creditor, but there are several other options worth exploring.
For example, you may be able to convince your creditor to update your account as "Paid in Full" as part of your agreement to pay the total amount due in one lump sum. That's certainly better than enduring a "paid collection" on your reports for 7 more years, right?
Don't expect a collection agency to offer you anything first. Take the initiative, make your request in writing, and be sure to hold off on sending payment until you receive an agreement in writing as well.
