which to do first

[meridianboy]

I am working on paying off all of my collections as well as one tax lien i have. Should i pay the tax lien off first or the collections? I cant pay them both off at the same time. The tax lien was put on my report this year. Its for unemployment overpayment

[Steve]

Both are having a negative effect on your credit report. How many collections do you have? Would you be able to pay all the collections off at once?

[Ivan.Gusev]

You should definitely pay off the tax lien first. It is having a more drastic effect on your credit than the collections accounts especially since it is fairly recent. The collections accounts that are more than two years old, I would not touch at all. The reason behind this is this, when you pay off older collections what that does is it brings these accounts current making them factor in to you current credit report hence lowering your score. When i work with clients on getting them qualified with any lender I usually recommend leaving the older collection accounts alone, at least for the period of the inquiries. The formula that is used by the credit bureaus is quite complicated a sometiems counter intuitive. Also make sure you keep your balance at 30-40% of the available credit line. Hope this helps.

[meridianboy]

What if the items will be removed when paid off not just updated as paid and closed?

[Ivan.Gusev]

If the items will be completely removed from all three bureaus then yes that shouldn't be a problem. You do have to make sure and request for the collections agency to remove the account form your credit in its entirety, if payed off and get that confirmation form them in writing, otherwise once they receive the funds they may forget to remove the account. Just an extra piece of mind.