If I pay off a closed credit card, how much will my score increase?

It is always a good idea to pay off any kind of debt. Especially if you have too much outstanding debt, it helps to clear it off as soon as you can. If you closed your credit card a while ago, and your creditor hasn’t sold your debt to collections, the credit card balance will show up in your report. Paying it off will help you increase your credit score in the long run.

But, if your debt was sold to a collection agency, you have to make the payments directly to them. Once paid off, it will be updated as a “paid collection” in your credit report. A derogatory or charged-off account stays on your credit report for seven years irrespective of whether you have paid it. This can affect the way your lenders look at your credit history while approving you for a new loan or credit card. If the lender you have approached is using one of the newer versions of the FICO® and VantageScore® models, they may ignore a collection debt if it is paid.

But, if you have closed the account yourself, it won’t leave a negative mark but will hurt your score in other ways, like increased credit utilization, reduced credit mix, and changed length of credit history.

Paying off the credit card will help you reduce your overall debt. How much your credit score will increase depends on other factors used to calculate your scores as well as the version of the credit scoring model.