Recently, a great mortgage broker whom I work with specializes in credit repair and it saddens me to see intelligent well-intentioned people taking steps to improve their credit using logic and actually end up destroying it!
Paul was telling me of a recent example - a gentleman that he pre-approved for a mortgage with the intention of buying a home within 45 days. His credit was borderline but he was able to get him pre-approved. He warned him NOT to touch his credit. Two weeks later, this customer called and proudly announced that he "sweetened" his credit score by paying off two collection accounts that appeared on his credit report. Paul told him (in a kind but factual manner) that he probably killed his chance of qualifying for a mortgage.
Unfortunately, an old collection has less impact on your credit report than a new one. When the collection was paid off there was "new activity" on the account. The rocket scientist who created the credit rating system states the credit bureau uses this information to evaluate credit and identifies this "new activity" as a new collection (in the short run) and the credit score will actually decrease. The benefit of the postitive action taken on the account by paying off will be realized in about six months.
Paul strongly suggests that before you act on a logical action to improve your credit to first check with a well-seasoned expert. Better yet, Paul Gregory will get it done for you! He can be reached at (904) 415-5166 in Jacksonville, Florida.