I paid off an old debt and my credit scores fell. What happened?
Congratulations on paying off the debt. You did a good thing! A collection with a zero balance is better than a collection with an outstanding balance. However, as you noticed, there can be a temporary negative effect on your credit scores. This is one of the unfortunate issues that can come up in the course of your credit repair program. Don’t worry! There are two pieces of good news for you, but first let me explain why your credit scores fell.
Activity Date Update
Your old collection had not been updated on your credit report for over a year. It was reporting each month, but the date of last activity furnished to the credit bureaus was quite old. When the collector processed your payment and reported the new zero balance to the credit bureaus the activity date was refreshed. New collection activity will cause a quick drop in your scores. This can be frustrating and may seem like a credit repair setback, but as promised, there is some good news.
The Benefit Will Come Soon
First, the negative impact will fade quickly and the new zero balance will be a benefit to your credit repair. Within a couple of months you will come out ahead. Second, if you question the validity of the collection (many people in credit repair programs pay off erroneous debts just to get rid of them) you can dispute the paid account. A paid debt is more likely to be deleted than one with a balance.