Credit score question

Does anybody know what would be most beneficial for raising a credit score- paying off 5 collection accounts or one judgment? Obviously I intend to pay off everything, but I will be coming into some unexpected money shortly and could choose to do one of those things immediately, and just want to get the most bang for the buck.

IIRC, it was Credit Karma which was good at comparing ways to affect your credit score. It also offers a simulated FICO, the accuracy of which I do not know.

Worth a click.

Correction - it appears to be presenting the actual scores from both TransUnion and Equifax

Can’t really say definitively without seeing your credit report, but here’s some common-sense financial advice. The judgment is almost certainly a more pressing issue. Collection accounts can become judgments if you do not keep up on payments. But a judgment already has the force of law behind it, and will hurt you more and sooner if you don’t take care of it. Judgments that are not handled can become garnishments, whereas a collection would have to go to judgment before that is a risk. I would pay off the judgment ASAP, with an eye toward keeping the collection accounts in good standing simultaneously (meaning, make timely payments as agreed upon with your creditor).

As far as which is literally more beneficial to your credit score, I cannot say. Your credit is going to end up pretty low either way, though, and 5 or 10 points is unlikely to make or break you until you hit the 650+ range. I can say that the collection accounts are already being reported to credit bureaus as “in collections.” Even if you paid them off tomorrow, they will say that until 7 years have passed. So unless you are able to negotiate a pay-for-delete, which as I understand it happens rarely these days, pay the judgment first.

I work in residential lending and we would not extend credit to anyone who had either a judgment OR multiple active collections. We would ask them to pay off all the debts before extending credit. But our underwriters take a dimmer view of unsatisfied judgments than they do of an account in collections.

I will not be applying for any kind of credit until after my credit report is clean of current negative items and my score is high enough to guarantee approval- I’m just wanting to ensure that my windfall is put towards increasing my (admittedly low) score as best as is possible. I’m already paying the judgment as agreed (so it isn’t moving toward garnishment). I intend to have all of the negative items on my credit report paid and closed within the next 6 months. Thankfully I don’t have a lot of them, just a collection of medical expenses that have been placed at several different collection agencies.

Thanks for the information!

One thing you should also look into. If you have a judgment and accounts in collection, try negotiating. You can often settle for less than the whole and sometimes get them to remove the bad information from your credit report entirely.

This of course varies depending on your situation, for example if the creditor knows your work, your state laws and so forth.

It may be also worth your while to look into state laws to see how long your debts are valid and judgement are valid. If it’s been three to five years you may be sitting on uncontrollable debts, from a legal standpoint. Of course some states have very long time periods for judgments to remain valid.

Unfortunately, your judgement and delinquencies won’t disappear when you pay them. They will appear as discharged, but they don’t disappear until seven years after the last activity on the account.

This is true, but the older the discharge, the less they affect your score. So it’s beneficial to discharge delinquencies as soon as you are able to.