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How Many Points Will My Credit Score Go Up When A Derogatory Mark Is Removed?

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Wow, so you have either paid off a bad debt or it has been long enough for it to finally fall off your credit history. Either way, I bet you are feeling a big relief! 

And, now you’re wondering, “How many points will my credit score go up when a derogatory mark is removed?” There is no “one size fits all” concrete answer. When a derogatory mark is removed, credit scores can increase in a range anywhere from barely noticeable up to 150 points.

So now you are wondering if there is a point to paying off your derogatory accounts. Keep reading because I’ll cover that below. I’ll also talk a little more about how much your score will increase if you pay off collections accounts.

I’m also going to explain how to remove negative information from your credit. And, finally, I’ll give you some information to help you decide if you should pay off closed derogatory accounts.

Let’s start with improving your credit score by paying off derogatory accounts.

Will Paying Off Derogatory Accounts Help My Credit Score?

Just to be clear here, when I say “derogatory,” I do not mean you were a day late on your rent or missed the due date on your car loan payment. By derogatory, I mean your debt 

  • Is over 30 days old, or
  • Has been transferred to a collections agency, or
  • Resulted in a debt settlement agreement, or 
  • Went into foreclosure, or
  • Resulted in repossession, or
  • Was caused by filing bankruptcy.

Also, just because you pay off a derogatory debt, does not mean that it comes off of your credit report. Once this negative mark hits your credit report, it will likely be there for about 7 years.

The good news is that the older the negative item gets, the less it affects your score.

The bad news is that even if you do pay it off the debt, your low credit score may not go up much at first, if at all. 

Back to the good news again. You have a better chance of a lender approving a loan if your report shows a derogatory debt was paid rather than left unpaid. 

Think of it this way. Let’s say I move into your neighborhood. I might drive a nice car and seem like I have all kinds of money.

Then one day I tell you I had some sort of glitch with my paycheck and ask you if I can borrow some money. But, you know someone from my old neighborhood and during a phone call, they say I borrowed from them and never paid them back.

What are the chances you will lend me the money? Slim to none, I’ll bet.

But, why not? I have nice things and it looks like I can easily pay you back! But you likely wouldn’t give me a personal loan because my past actions prove that although I may look like I can pay you back, that doesn’t mean I will.

That person from my old neighborhood is basically acting as a credit report. My action of going to a new neighborhood and asking to borrow money is very similar to how it would be if someone went to a bank that doesn’t know them and asking them for a loan or to a credit card issuer and asking for new credit cards.

Now think of that same neighborhood scenario again. Only this time, instead of learning I never paid them back, you learn I did pay them back but there were several late and missed payments, so it took far longer than they expected.

Now would you lend me the money? Maybe. It’s not a solid yes, but at least it’s not a solid no.

What I’m trying to say is that paying off your derogatory debt may or may not help your credit score increase. But, when you try for a loan or fill out a store credit application, at least they’ll see you did eventually pay your debt.

As the saying goes, that’s not nothing.

You may still find it hard to get a loan or credit, but your chances are better than if you do not pay it back.

Read about how to build credit as a college student.

How Much Will My Credit Score Go Up If I Pay Off A Collection?

The good news is that newer credit scoring methods ignore paid off collections (they don’t have much of a negative impact). So once you pay off or settle your outstanding debt, your score can improve. 

The bad news is that these new methods are only slowly being adopted. There are some lenders that still use the older scoring methods. The possibly worse news is that some of these lenders are mortgage lenders.

So if you are wanting to get a loan and the lender uses the newer method, you may be in luck. After all, lenders may prefer to see paid off debts that were late (but you and I would prefer they don’t see anything derogatory).

I know, I haven’t really answered your question about how much your score will go up. That is because – well – it depends. 

How old was the debt? Do you have other derogatory marks? Which scoring method is being looked at?

A few things you should know…

The older items are on your credit report, the less impact they have on your score. 

That goes for both good and delinquent marks. 

Collections normally stay on your credit report for 7 years. If it has been over 6 years and you are just now paying the collection amount off, your score will be affected less.

If you have other collections or derogatory marks on your report, paying just one may not help your score at all. That doesn’t mean you shouldn’t try to correct as many of the derogatory marks as possible, though.

Also know that just paying toward the collections and not actually paying it off will not help your score.

Something else you should keep in mind is how the 7 year time limit works. The collection will normally fall off your credit in 7 years after the original delinquency date (the date of the first missed payment) – unless there has been any activity.

In some cases, that can include you making a payment, even if it is just $1. In other words, if a collection agency contacts you and convinces you to make even a small payment, that 7 years might start over.

I am in no way saying you should not make payments. I just want you to be aware that if you were close to 7 years, and make a payment, you might reset the clock.

So it may not matter if a lender uses the newer credit score system or the old. Once you pay off a collection, it will either show as paid or it won’t show at all.

In either case, your actual score may or may not increase. But, it’s what the lender actually sees that might help.

If they see you paid it off, it definitely can help. And, if they don’t see it at all, even better. 

What I am trying to say is that your credit score may not go up, but your actual credit profile and payment history might look better to a lender.

How Do I Remove Derogatory Remarks From My Credit Report?

Okay, you’ve decided enough is enough and you want to fix your credit and remove the derogatory remark(s) from your credit. But how do you do that?

Well, I am here to help. I won’t guarantee any of these methods work for you, but they are methods you can try.

The first thing to do is to get a copy of your credit report. The Fair Credit Reporting Act is a federal law that protects the information that credit card companies collect. You should review your credit report periodically to be sure it contains accurate information. You can request a free credit report every 12 months from each of the national credit bureaus (*NOTE: you can get one free weekly, through 12/31/2022, due to Covid).

Next, you’ll want to dispute the issue. This will only work if the remark is incorrect or unfounded. 

You don’t even have to dispute the entire issue. You can dispute the problem with the major credit bureaus to correct your name, the amount, or even a wrong date.

If the entire issue is wrong, then you definitely want to dispute it to get it off your record. But, you may also want to dispute it to make sure the amount owed or other specifics are correct.

If the derogatory remark is accurate but you still want to try to get it removed, there are options for that as well. The next couple of options may be a long shot, but they might work.

You can try something called a pay for delete letter. You see, a debt collector agency gets paid a portion of any money they collect from you. They might be willing to remove the derogatory remark for a certain amount of cash.

Keep in mind that it’s logical that the amount they would want from you would be more than what they would earn by getting you to pay the entire amount. The collection agency may or may not be willing to go this route, it is totally up to them.

Another option is a goodwill letter (also known as a goodwill deletion). This would normally only work if you have a good track record and the derogatory remark was a one time issue. It would also help if you have a long history with the lender.

Basically, you are contacting the lender to point out your good history with credit and with them. You are promising that the derogatory event it was a one time problem and that you want to keep you account in good standing.

It would also help to promise to pay off the collection immediately or in specifically set time payments. In return, you ask them to remove the item from your credit report.

The final option I will provide is to get professional help. I don’t mean a therapist, although that may be an option too.

No, I mean a credit counselor or credit repair service. They may have access to, and knowledge of, people and processes that you do not. 

This option may not be free. And, it may not even be cheap. But, it is an option. 

Should I Pay Off Closed Derogatory Accounts?

In a word, yes. You borrowed the money, bought the item, used it, etc, so you owe the money and should pay it back.

However, you need to know WHO to pay. If the derogatory account is closed by the lender, they have probably sold it to a collection agency.

That means sending money to the original lender will do no good because you now owe the collection agency. 

And, like it or not, collection agencies can play hardball. They may even sue you, although each state has a statute of limitations for the length of time in which you can be sued for the debt).

So yes, you may have gone through a rough financial situation and not paid your debts. But if you can, the best thing to do is to pay off closed derogatory accounts once you are able.


So there you have it. How many points will your credit score go up when a derogatory mark is removed? Possibly a lot, possibly none.

After paying off a derogatory or collection account your score may not go up, at least not right away. But, your credit history will look better.

There are other options for removing derogatory marks, but they are not guaranteed to work.

And finally, yes, you should pay off closed derogatory accounts! I am a firm believer of paying what you owe. You entered into a promise, probably in writing, to receive something in return for some form of payment. If you received your portion, you need to pay what you promised.

I know this all might sound a little harsh. If you are a responsible person, you will understand.

If you need some help figuring out how to pay your debts or just with budgeting, I would be happy to help. Check me out at  

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