Maybe—but not always.

Many borrowers assume that paying off every collection account will automatically increase their credit score. Unfortunately, credit scoring is more complicated than that.

Depending on the age of the collection, the credit scoring model being used, and how the creditor reports the account, paying off a collection may have little effect on your score. In some cases, updating a collection to a zero balance creates new activity on your credit report. Certain mortgage credit scoring models may temporarily interpret that recent activity differently, and borrowers occasionally see their scores decrease instead of increase.

The important question isn’t “Should I pay it?” The better question is “Will paying it help me qualify for my mortgage?”

Every situation is different. Before paying any collection account, let us review your credit report and determine the strategy most likely to improve your mortgage approval. Sometimes paying a collection is the right move. Other times, leaving it alone until after closing is the better option.

A five-minute conversation can save you hundreds—or even thousands—of dollars and prevent unnecessary delays in your home purchase.