Impact of Canceling Credit Cards on Credit Report

No I would not close them out.  That actually has a negative effect on your credit report.  I would maybe make a small purchase on them here and there. Then pay it off. It will help your credit score in the long run.

Keep your credit cards open even if you pay them off.  If you choose to close them call the credit card company and have them state that the account was closed at customers request.  This way, on your credit report it will indicate that you closed the account at your request which looks better then just stating account closed.  More impotantly, leave the accounts open.

If you are a good payer, then don't close your credit card.

Pre-paid credit cards

Make sure you negotiate a "pay for delete" with every single one of the collection companies BEFORE you pay. Get it in writing that they will remove any negative/collection information from your credit report once you pay your debts. If you do this with all of your collection accounts, you'll soon have no record of collection activity and your credit score with jump dramatically. Keep in mind that sometimes it takes up to 3 months for credit files to update. Your credit score can also have a positive change due to this.