If I pay my debt collectors as soon as I receive it in the mail, will it affect my credit score?

Seeking Advice
1

P.S. I don’t own any credit cards yet, but will paying off the debt as soon as I get the letter from the collectors still affect my credit score? I had a negative balance of $400 on a PayPal business account since every customer case was ruled against me—I was dropshipping and didn’t have the shipping labels on hand.

2

If the debt was sent to collections, you’d need to check with the collection agency. Once PayPal sold the debt, they stopped handling it, and any reporting would come from the collector now.

3

Unfortunately, once a debt is in collections, it may already impact your credit score even if you pay it quickly. It’s worth asking the collector if they offer ‘pay-for-delete,’ where they agree to remove the collection from your credit report if you pay it off in full. Not all agencies offer it, but it’s worth a try.

4

Paying the debt as soon as possible is still a good step, but it doesn’t necessarily erase any impact the collection might have on your credit. Once it’s been reported, it could stay on your report even if it’s marked ‘paid.’ Contact the collector and see if they’re willing to work with you on this.

5

In some cases, paying a collection can still impact your credit score, but it’s better than leaving it unpaid. Some creditors are willing to negotiate a ‘pay-for-delete’ option, which would mean removing the account from your credit report once paid. Not all collectors offer this, so it’s worth asking.

6

If you’re new to credit, keep in mind that collections can stay on your report for up to seven years, even if paid. However, paying it off is always better than leaving it as unpaid debt—it shows future lenders that you took responsibility. Reach out to the collector and ask if they’d remove it once settled.

7

Even if paying the debt doesn’t remove the negative item immediately, showing it as paid may help if you’re applying for credit down the line. Some lenders view a paid collection more favorably than an open collection. Check with the collector about removing it after payment—some are more flexible than others.