|Improve your credit scores|
Before I go into any depth here, I want to point something out: This is where I got my start. This is my home turf. Working as an activist for consumer rights against debt collectors came later. Credit – and making it better – is where it all began. Ah, the memories...
Anyway, back to the issue at hand. You have several options.
Option #1: Dispute Paid Collections With the Credit Bureaus
This is a very "maybe" course of action, but if you're working on cleaning up your credit anyway, it's worth a shot. Now, the legality of disputing accurate information is a gray area. I am not advising anyone to dispute accurate information on a credit report. If, however, you discover errors in the collection agency's trade line on your credit report – no matter how minor that error may be – disputing the information is an option.
In most cases, when a person disputes credit information, the credit bureaus contact the information furnisher (in this case, the bill collector) and say, "Hey, is this right?" and the information furnisher says, "Yep, sure is." and its game over for you. Is this ethical? Heck no, but its how the game is played. The advantage you have here is that, once the debt is paid, the collection agency really has no incentive to respond to the credit bureau's inquiry. If they don't respond within 30 days, the trade line vanishes and your credit improves.
Option #2: Pay Down Some Debt
It seems like everywhere I look, I see "experts" telling consumers to keep their credit card debt below 30%. Doing that will provide your credit with some measure of protection, but if you're trying to improve your credit scores, you need to go much lower. Ideally, a person hoping to improve his or her credit should carry a balance between 5% and 9% of the credit limit. It isn't necessary to pay the card or line of credit off each month.
Where did I get that number? Simple. I've spent years using my own credit as the guinea pig for my theories. In my experience, this is the ideal number.
Option #3: Become an Authorized User
This one won't work for everyone, but if you have an immediate family member with great credit and a credit card, its the way to go. Just ask your family member to add you on to his/her credit card account as an authorized user. The card information then appears on your credit report and – provided the primary card holder is an immediate family member – it factors into your scores. You can become an authorized user on any account, but it won't help your scores unless that person is someone whose card the credit bureaus can be reasonably certain you would actually use, like that of a parent or spouse.
Try to avoid secured credit cards if you can, and it should go without saying that you should pay all debts on time. I'd write more here, but I'm falling asleep at my desk...
What to Do When a Collection Agency Validates Your Debt
Death of the Pay for Delete Agreement
Deleting Collections From Credit Reports With the "One-Two" Punch