TIL that paying off a $300 collection in full dropped my score 15 points

I had a $300 medical bill from 2022 I finally paid off last month thinking it would help my credit. Just checked my FICO score and it dropped 15 points because the collection agency updated the account as recently active. Has anyone else gotten penalized for actually paying old debts?

3 comments

3 Comments

max_schmidt7715d ago

Wait a minute, is 15 points really that big of a deal in the long run? @smith.lee said it bounced back in 4 months, so it sounds like a temporary annoyance, not a real crisis. Ngl, if you weren't planning on getting a loan this month, nobody's gonna care about a 15 point drop.

smith.lee15d ago

Back in 2019 I paid off a $250 cable bill collection and my score dropped 12 points the next month. Felt super unfair since I was trying to do the right thing. The system basically punishes you for touching old debts at all. It bounced back after maybe 4 months but still felt like a total waste.

juliaa6515d ago

@max_schmidt77, I get what you're saying about it being temporary, but a 12 or 15 point drop can actually matter more than people think. Some mortgage lenders or credit card companies use hard cutoffs, and even a short dip can push you just below a good tier. The real issue @smith.lee is pointing out is that the system doesn't make sense when paying off a debt hurts you instead of helping.