Should I pay off a collections account to preserve the age of my credit history?

You are responsible for your debt even if it falls off your credit report


The oldest account in a reader’s credit history has been in collections for six and a half years, and they wonder if they should pay it off to preserve their length of credit history even though it will soon be off their credit reports.


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If the oldest account on your credit history is in collections, should you just let it go or pay off the debt in order to preserve the age of your credit history? That’s the dilemma a reader is facing.

Reader Vida writes: “I have a derogatory credit account that is now in collections. The account was opened in 2000 which is over 20 years ago and is the oldest account in my credit history. I now owe about $8,000 on it. I stopped payment about 6.5 years ago and it is due to completely drop off my credit report in just a few months.

“Should I just let it drop off or should I try to salvage it because of the age of the account and its impact on my credit age? I understand that average age of accounts impacts the score and this is my oldest account. Without this, the average age would drop by about a decade.”

Check out all the answers from our credit card experts.

Ask Poonkulali a question.

How will collections payoff impact your credit score?

Vida, you are right that the collections information will drop off your credit report soon, since it will be reported for up to seven years following the time it went into collections.

Your payment history, which includes input on payments that are delinquent or went into collections, makes up 35% of your FICO score, so that’s an important aspect to consider. In fact, this factor outweighs other inputs to your credit score, considering that lenders are most concerned about whether you can be relied on to pay back your debt.

Having an account in collections could have a substantial impact on your credit score. According to Experian, some lenders such as Fannie Mae could even require that you pay off any collection accounts before closing on a mortgage loan.

Generally, it can only help your creditworthiness if you pay off an account in collections. The impact on your credit score, though, depends on which version of the credit score it is. Newer versions, including FICO 9 and VantageScore 3.0 and 4.0, are set up to ignore collections that have been paid off. Thus, those particular scores could see an improvement if you pay off the account in collections.

However, older versions of these credit scores likely won’t reflect any improvement to your score even after paying off the account in collections.

See related: Which is the most accurate credit score?

Impact of length of credit history on credit score

It seems your larger concern is preserving the length of your credit history. This is a legitimate concern given that this factor accounts for 15% of your FICO score.

Fair Isaac Corp., the parent of the FICO score, advises, “In general, a longer credit history will increase your FICO scores.” The score takes into account how long your credit accounts have been established, factoring in the age of your oldest account, the age of the newest account and the average age of all your accounts.

According to FICO, “Like fine wine, whiskey and cheese, most credit histories only get better with age. Although the length of your credit history only accounts for 15% of your FICO score, it’s still an important influence on lenders. It can definitely impact the chances of whether or not you get a loan.”

See related: If I pay off an old debt, will it damage my rejuvenated credit score?

Paying off collections will be to your credit

Even if this collections account is a newer one which will not have any significant impact on the length of your credit history, and you have no pressing need for new credit, it will always be to your credit to pay off debt. Irrespective of the fact that after a seven-year time frame the collection information will fall off your credit reports, old debts have long shadows and you will still be responsible for them.

For one, the account could be sold off to a debt buyer who could try to collect from you. There is a statute of limitations on debt, which varies by state, beyond which time frame debt collectors cannot legally sue to collect from you. That may not be a deterrent to them, however.

It’s likely that you are finding it difficult to come up with the substantial $8,000 balance you owe on the account. In that case, you should try to settle with the creditor, or find an accredited nonprofit credit counselor who could negotiate a settlement on your behalf with the creditor. (You could owe taxes on any forgiven debt.) Once you clear up the debt, be sure to get a written account of the settlement for your records.

You will then be clear of the debt. And the cherry on the cake is that you can also continue to preserve the age of your credit history!

Contact me at with your credit card-related questions.

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