Didn't pay credit cards for 2 years and recently settled on all of them will this look better on your credit report?

Answer

Paying off collection and charged off accounts does not necessarily raise your credit score.

Credit scores are calculated on ALL the information in your credit report. 35% is based on payment history and this is where you may take a hit when you pay off a collection account.

Example: You have a credit card collection that was last used in 2000 and has not been updated on the bureaus since 2001. Because the UPDATE (the date it was last reported) is over 12 months old, it impacts your credit score less and less. Paying that collection account causes you to have a (now) paid collection as of 09/04, making it fall within that important 12 month time-frame. You might actually take a deduction in this case. Once again, it depends on ALL of the information showing.

If your collection accounts had current reporting dates, then paying them off definitely improved your score. Regardless of which scenario is true for you; your score will ultimately be much better. 12 months from now your score will be higher having old, paid collection account than having old, unpaid ones.

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