What happens when I pay off a debt in collections?

I just started building my credit and I thought everything was going good since I've been paying my CC bills on time and in full. I did a credit report and apparently I'm in collections for an unpaid phone bill, a bill I was never even aware of. I had a T Mobile account with me and my mom on the account, I had switched to AT&T and left just my mom on the T-Mobile account then my mom decided to get an iPhone when T-Mobile first got them, so I paid what I thought was her last bill so she could switch to the iPhone but apparently there was some hidden fees for switching plans that I was never billed for and nobody contacted me to pay this and now I'm in collections. It's only 94$ and I'll gladly pay it right now because I'm really trying to build good credit but will it make a difference on my score?

It won't affect your score right away, but the negative effect will start to fade shortly after it is paid off and in a few years it won't matter at all. Not paying means that it will continue o affect your score and you will not see any improvement.

Unfortunately, paying a bill already listed in collections on your credit reports will not improve your credit scores. A derogatory trade line is still a derogatory trade whether it is marked "paid" or not,

However, the older the delinquency is, the less impact it will have on your credit scores.

Pay the bill. A paid collections look better to future creditors than one that is not.

Paying won't improve your score, but it does look better to creditors reviewing your credit report.

You may as well negotiate settlement for as little as you can. Offer half in a lump sum payment. Get any settlement agreement in writing and do not give the collector direct access to your bank account.