Two Surprising Facts About Collection Accounts


Ask Carolyn Warren

What you don’t know about collections can hurt your credit score.

Here are two facts most people don’t know:

1) The balance does not affect your credit score.

Whether you owe $100 or $10,000, it makes no difference in your credit score. A collection is a collection is a collection. Why?

Because a large balance might indicate a person has a high income; whereas, a small balance might indicate a person had a low credit card limit and therefore has a low income. Since it is illegal to consider income for credit scoring, the credit reporting agencies are barred from making a difference in score due to the balance.

This is important to know, because if you’re thinking your score will go up as you pay down the balance, you are in for a disappointment. The only way you will get your score to go up is by the collection…

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