Typically I say “tips” are for the wait staff, but this collection of “tips” is the real deal. There’s nothing behind it. You know I have no agenda because I’m not licensed to sell anything. I’m a Consumer Advocate who is trying to help You make smart decisions. That is what I do. Once a week I’ll be putting out a financial or credit tip to help you out! You can view my full list of Credit Tips here.
So without further ado, here’s my tip of the week:
Do NOT pay collections and expect your credit score to go higher.
The credit scoring model only looks at two things on a collection; the most recent activity date and the status code. It doesn’t look at the balance amount. For this reason, a collection for $5 and a collection for $5,000,000 have the same negative impact on your score. Paying off a collection can only hurt you because it updates the activity date and the $0 balance doesn’t help you.
If you’re looking for more tips or financial advice you’ll want to check out my show Talking Money with Mr. C, airing Sunday’s from 1-3 PM on KFMB 760 AM. You can find a podcast page full of our past shows here.Check us out this Sunday for all the latest and greatest information on the state of the financial marketplace.
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