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. Thanks to the sometimes bizarre quirks of credit scoring, state statutes of limitations and the federal Fair Credit Reporting Act, consumers can't necessarily assume that paying off old debts will improve their financial situation or make them a better risk in lenders' eyes.

Now that you've decided to clean up your act, use caution: Settling some old debts can harm your credit score. Here is how to do the right thing the right way.

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.

Thanks to the sometimes bizarre quirks of credit scoring, state statutes of limitations and the federal Fair Credit Reporting Act, consumers can not necessarily assume that paying off old debts will improve their financial situation or make them a better risk in lenders eyes. Add in the tactics of some unethical collection agencies, and you have a real quagmire.

"It seems so easy, but it is not," sighs Steve Rhode, a private money counselor and co-founder of the Rockville, Md., credit-crisis counseling firm.

Here are just some of the problems that can arise:

• If a creditor has already charged off an account and sent it to collections, paying may not help your credit score and might hurt it.

• Arranging a payment plan or even inquiring about an old debt can restart the statute of limitations in some states, allowing creditors to sue you.

• Simply contacting a creditor about a past-due account can revive its interest in trying to collect, leading to harassment and hardball tactics.

• Unethical collection agencies may promise to upgrade how your debt appears on your credit report in exchange for payment -- then not follow through or make matters worse by making the debt seem more recent than it is.

Jim and Andrea have heard some of the horror stories, and they are nervous. The two, both 31, want to pay off the $33,000 they owe to various collection agencies and creditors, including the Internal Revenue Service (IRS). Since accumulating the debt, they have landed better jobs and moved to a cheaper area in Pennsylvania, freeing up an extra $800 a month to pay off bills.

"Our dream is to buy a house," Jim wrote me in an email. "We are both committed to getting out of debt, but we want to do this the correct way."

It is not going to be easy, credit experts agree. Save yourself thousands of dollars in Tuition Cost