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One reason to pay is because you plan to borrow again

But if its already reached collections then it doesn’t really make a difference to your credit eligibility for the next X many years

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Its weird at that point it wont drop off whether you pay the collections or not, for 7 years so theres literally zero incentive to pay the collections off.

I thought once you paid the debt the credit score should improve, no?

It improves but collections are an adverse notice on your credit report that stay for 7 years. Its different from just holding a high balance on the card.

The score almost means nothing with them present.

I once had a collections report on my credit history. I paid off the debt and asked them to remove it, a few days later it was gone as far as I could tell.

Not that everyone's experiences will be like this, just pointing out it is not necessarily always 7 years on the report.

So if I want to finance a new car, does it make a difference whether the debts are paid or not?

Yes - unpaid charge-offs are more derogatory than paid ones - I'm not sure that hits (say) a FICO score but lenders that look at a full report can tell the difference.

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