When you have a debt, it is always proper to pay it off. Texas credit attorneys can help you in such matters. However, some people say that paying off debts in collection can lead to a lower FICO credit score, because the collection is then made to be a new one, which can inadvertently lower the credit score. So if this is the case, why would you still pay off your debt if it will just lower your credit score that you are trying hard to increase?

According to the FICO score developer and Principal Scientist Ethan Dornhelm, this is all a myth. Paying partially or fully on a collection account will not in any way bring down the FICO scores, unless by some accident of fate, your collections date becomes updated. He further stresses that the main focus of FICO credit scores is on the presence and time a collection appears on record. This is also what most commercial FICO credit score models and bureaus have as basis.

Because of this clarification, both consumers and collection agencies alike will benefit from it. Consumers can now lessen their debts while collection agencies can now have an easier time in their collections, since the consumers do not anymore have the fear of lowering their credit scores if they settle their balances.

Furthermore, on the ability of FICO 08 to bypass the collections that are less than a $100, Dornhelm states that the decision was based on the study that these debt collections of low amounts can be and will easily be paid since it does not compromise their FICO credit scores. These collection accounts are often comprised of library fines, utility bills, and other minor expenses. It will still be something that consumers are obliged to pay, but at least it does not come with the fear of having it affect their credit scores. Don’t be in debt; consult a debt credit counselor on how to maintain your credit score.