One of the primary functions of your credit score is to give lenders a way to judge the likelihood you will pay on the credit they extend to you for car loans, credit cards, mortgages, etc. So typically paying off your debts - even debts that have already gone into collections - will usually improve your credit.
But there are two very important things to keep in mind:
1) For the most part, credit reports only contain the credit activity of the previous 7 years. So if these debts have been in collections for more than 7 years, you will actually hurt your credit by paying them off. This is because your new payment will now become the date of last activity on the account, causing something that had fallen off your credit report to reappear as current. And bring old accounts with poor payment histories back onto your credit report will hurt your credit score.
2) Find out your state laws regarding the statute of limitations on debts. Statute of limitation laws set a limit on the amount of time a creditor has to sue you in court to force payment on a bad debt. And just like with credit reports, paying on these debts can re-set this clock. Every state has their own laws, but in some states, suits regarding bad credit cards debt must be filed within 3 years of last activity. So be sure to investigate this before you start re-paying on these. You wouldn't want to give your creditors a second chance at suing you for these!
With that in mind, if these debts are still fairly young, paying them off should improve your credit.
One of the primary functions of your credit score is to give lenders a way to judge the likelihood you will pay on the credit they extend to you for car loans, credit cards, mortgages, etc. So typically paying off your debts - even debts that have already gone into collections - will usually improve your credit.
But there are two very important things to keep in mind:
1) For the most part, credit reports only contain the credit activity of the previous 7 years. So if these debts have been in collections for more than 7 years, you will actually hurt your credit by paying them off. This is because your new payment will now become the date of last activity on the account, causing something that had fallen off your credit report to reappear as current. And bring old accounts with poor payment histories back onto your credit report will hurt your credit score.
2) Find out your state laws regarding the statute of limitations on debts. Statute of limitation laws set a limit on the amount of time a creditor has to sue you in court to force payment on a bad debt. And just like with credit reports, paying on these debts can re-set this clock. Every state has their own laws, but in some states, suits regarding bad credit cards debt must be filed within 3 years of last activity. So be sure to investigate this before you start re-paying on these. You wouldn't want to give your creditors a second chance at suing you for these!
With that in mind, if these debts are still fairly young, paying them off should improve your credit.