Soon I will be making more money and will easily be able to pay off my creditors but I have poor credit right now. Is it better for the credit report if I pay them off in full or if I just ride the loan out to establish a good payment history? Also any other information on how to improve credit will be greatly appreciated.
2006-06-10 16:50:56 · 19 answers · asked by mike 2 in Business & Finance ➔ Credit
pay off your creditors now...if you just establish a payment plan with them, as u say your credit is poor...it well remain poor...after there payed off...then buy something on time and never be late on a payment...then you well establish AAA credit...
2006-06-10 16:56:23 · answer #1 · answered by GyVuPhaYs 4 · 0⤊ 0⤋
Credit score computation is complex and involves many factors, here are some tips on improving your credit score:
1) Do not miss a payment.
2) Do not make a late payment.
3) Pay off the cards as soon as possible, but don't close the accounts. Accounts which have been active for longer periods of time help your credit score. Charge a small amount each month and pay it off - every month. You will be establishing a 'good payment history', but you won't get killed by interest.
In general, the higher your ratio of credit available to credit used is, the better. (i.e. If your credit limit is $2,000 and you have a balance of $1,500, your credit score would be lower than if the limit were $2,000 and your balance was $15: you have more 'unused credit'. This being said, having too many open lines of credit can hurt your credit score, watch how many accounts you have open.)
I ran myself into credit problems in the past, and unfortunately, there is no quick solution. Just keep making the payments on time, and your score will slowly, but steadily improve.)
2006-06-11 00:07:21 · answer #2 · answered by mrpink 2 · 0⤊ 0⤋
I like to pay off my debts as soon as I can that way I pay less interest in the long run and have the worry of the debt for a shorter time. When you are debt free you can then focus on saving and will be able to build up your bank account faster than if you are still committed to the loans. The more you save - the less you have to borrow in future - the more manageble your finances are (especially if you should have the misfortune of loosing your job, for example).
Whatever way you decide, you will be establishing a credit history and so long as you are seen to pay your debts, have an income and can give good references, you should have little problems with obtaining finance in the future.
2006-06-11 00:05:53 · answer #3 · answered by Sue W 3 · 0⤊ 0⤋
Pay off all of your creditors and then cut up your credit cards, except for one card. Buy something every month on that card that you know you can pay off when the bill comes. For example, put all of the gas you purchase for your car on that card. Or groceries. Charge purchases you normally budget for, like groceries or gas. The key is never to spend more on the card than you KNOW you can pay off when the bill comes, and have that money set aside so that it's easy to pay off when the bill does come. This way you establish a solid payment history, but also avoid paying interest.
2006-06-10 23:57:24 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Pay them off. It will go on your credit report as paid in full and it's good for you. If you really like building your credit history, you could leave a small balance and pay it in small installments for some time. At least this way, you won't be paying this much in interest and still will be building your credit history.
2006-06-10 23:56:03 · answer #5 · answered by Aelita 1 · 0⤊ 0⤋
Pay them every month and you are establishing a payment history. This will keep your credit score good. Also remember that having a lot of cards is not a good thing when it comes to your credit score.
2006-06-10 23:55:25 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Pay most of it off, get up to date with payments. If you have a credit card, pay it off. It will probably make your limit go up, and then buy something that you have the cash for. That way you can send in the payment right away, and make your credit better. Good luck!
2006-06-10 23:55:00 · answer #7 · answered by boit 4 · 0⤊ 0⤋
What are you thinking, jen-w. Paying off balances does show payment history. It shows you can pay off your debt. Remember, debt ratio is also a determining factor in credit scores.
I keep hearing that closing accounts hurts your credit score. I've also heard that leaving inactive accounts open hurts. I am currently researching this facet of credit repair. Most of the credit questions I've seen here I have put to the test at one time or another. I recently paid off some accounts and closed them. WE shall see.
2006-06-11 01:04:15 · answer #8 · answered by David H 3 · 0⤊ 0⤋
get rid of your credit cards they cost you more than they are worth. If you can possibly, get caught up and stay current for at least 1 yr, it will help on any late payments etc, then pay it off. Late pays are the worst on your credit history, when applying for credit, its not how fast you paid it off but that you did it in a timely manner
2006-06-10 23:55:44 · answer #9 · answered by sweetokms 2 · 0⤊ 0⤋
If you pay them off in full like some of these people are suggesting you won't be showing a pmt history. It is better to make larger pmt's yet on a regular schedule "do not be late" and your credit will improve shortly..good luck and congrats on the pay increase..
2006-06-11 00:21:38 · answer #10 · answered by jen w 1 · 0⤊ 0⤋