5 Reasons to Pay Your Debt Collections

There are benefits to paying off collection accounts

Giving money to a collections agency can feel like handing your lunch money to a schoolyard bully. But it’s different when you legitimately owe what the collection agency is asking you to pay.

Paying a collection agency often is painful because the product or service associated with the debt has long since been consumed. If you’re debating if you should pay a debt you owe, here are five benefits of getting the collections agency off your back for good.

01 of 05

Stop Collection Calls for Good

Group of builders carrying a giant credit card
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As long as you have outstanding debt, you’ll probably continue getting calls from collections agencies. A cease and desist letter may end calls from one particular debt collector. However, since collections accounts often are sold or assigned to new agencies, there's a chance you’ll keep being contacted about the debt until it’s taken care of.


You can always send a cease and desist letter to any new collection agencies who start contacting you about debts owed.

02 of 05

Get Approved for Credit Cards and Loans

Many banks won’t approve a credit card or loan application as long as you have outstanding collections accounts on your credit report. This means no mortgage, no car loan, and no credit card. Additionally, some employers won’t hire you for certain jobs if you have unpaid debts on your credit report, and many landlords will reject your application for a lease.

Paying the collection won't automatically remove it from your credit report, but the money it costs to bring the balance to $0 might be well worth it if it that debt is what was standing between you and the need for a home or a car.


Ask for verification of a debt collection before paying it. Collection agencies have been known to place fake or expired debts on consumer credit reports just as these consumer are shopping for a new home or car.

03 of 05

Improve Your Credit Score

Fortunately, as collections get older, they affect your credit score less. After seven years, collection accounts drop off your credit report, even if you never pay them. But if the accounts are less than seven years old and not approaching the credit reporting time limit, a paid collection is better for your credit score than an unpaid one.

Settling an a collection by paying a lower amount may be an option, but it's not the same as paying in full. Some lenders still may view a lower negotiated payoff as an example of a potential borrower who didn't fully take care of a debt—even if your balance shows $0 owed.

04 of 05

Eliminate the Risk of Being Sued

People sometimes assume debt collectors won’t waste their time or money suing over a small collection, but that's not always true. As long as you have an outstanding collection that's still within the statute of limitations, there's a risk of being sued for what you owe.

A lawsuit could lead to a court judgment, a public record that will tarnish your credit report for seven years. And if you still don't pay up, the collector may get court permission to garnish your wages.

05 of 05

You're Closer to Being Debt-Free

Paying off a debt held by a collection agency means you'll owe money to one less company. You may feel like you’ve lost the battle if you pay a debt after resisting for months or years, but in the long run, it is better for your credit and your finances. Taking care of debt collections is a good thing when you can afford to do it.​

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Equifax. "Collection Accounts and Your Credit Score."

  2. Federal Trade Commission. "Setting the Debt Parking Brake."

  3. JP Morgan Chase. "How Does Settling Credit Card Debt Affect Credit Score?"

  4. Federal Trade Commission. "Time-Barred Debts."

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