When paying bills can hurt your credit

Settling some old debts can actually harm your credit score. Here's how to do the right thing the right way-by MSN Money

Cynthia worked hard to improve her credit scores. She was careful to pay her bills, including an auto loan and a credit card, on time every month. Finally, in December 2004, she decided to pay off the one old debt on her credit reports. Her scores promptly plunged by as much as 95 points. "I spent over $1,200 in paying off hospital bills from six years ago, thinking this would help," she wrote in an e-mail. "Did this hurt me instead?" Borrowers who try to pay off old delinquencies, charge-offs and collection accounts often learn the hard way: Sometimes, doing the right thing does the wrong thing to your credit. Click Here: When paying bills can hurt your credit - MSN Money