i have two maxed out credit cards which i've been paying the min monthly payment as well as an old cell phone bill. it all totals to about 800 dollars i will have to pay off. so should i continue paying the min payments or get a loan and pay all of these things off and just pay off the loan with monthly min payments?
2007-02-17 21:05:54 · 5 answers · asked by Anonymous in Business & Finance ➔ Credit
Paying off all of your debts immediately does not help you with improving your credit. Because you should show lenders that you are a good BORROWER. Your existing report shows lender that you pay your payments in full once you have money and you don’t when you are financially in trouble. Therefore you are not a good borrower to a lender (you are risky and they don’t make money out of you). So here some stuffs I suggest to do to polish your credit report and improve your credit:
1) Do not spend more than 1/3 of your limit. That's a rule. You said you have $500 credit limit. So do not spend more than $150 with your credit.
2) Do not pay your existing credit balance in full every month. Pay more than minimum payment but do not pay full. Say your minimum due is $10. I suggest you to pay like $50-$70 each month. Yes you should pay some interest but that's a price to improve your credit.
3) There are lots of articles here which you can find useful to boost your credit.
http://www.howtoestablishgoodcredit.com/Credit_Articles/index.php
2007-02-20 06:15:13 · answer #1 · answered by Anonymous · 0⤊ 0⤋
For one thing, stop paying the minimum monthly payments and start paying as much as you can on them. Pick the one with the highest interest rate and start paying as much as you can on it and get it paid off.
By paying the minimum, it's going to take you years and cost you a fortune in interest before you are out of debt. The absolute worst thing anyone with a credit card can do is pay the minimum payment. Do you ever look at your statements? Have you noticed that the balance only goes down a small amount each month? That's because if you pay the minimum, only a few dollars is going towards the balance. The rest is going to interest. By the time you pay off $8000 with minimum payments, it will have cost you about $40,000 in interest. That is insane.
If you can get a loan that is charging you less interest than the credit cards are, by all means do it and then pay it off, again by paying more than the minimum payment.
One more thing. If you do get a loan to pay off the cards, for Gods sake, don't go out and run up the cards again or you'll just be in worse shape than you are.
2007-02-17 22:46:53 · answer #2 · answered by Faye H 6 · 0⤊ 0⤋
You need to make more than the monthly payments. Start with the one with the lowest balance and pay anything extra you can on that one. Even just an extra $25 a month will help. Once that one is paid off go to the next lowest balance. Pay everything you were paying before plus what you were paying to the first debt plus the extra you paid them. Then when that is paid off put everything you were paying on the other two plus the extra. You will have them paid off in no time.
After that do not max out your cards again. You can charge on them but only charge what you can afford to pay off in a few months, etc. This way it shows that you can make monthly payments and that you do not carry a large debt load. This will also save you on interest fees. If you make only the monthly payment you will ALWAYS be in debt.
2007-02-17 21:19:12 · answer #3 · answered by Wicked Good 6 · 0⤊ 0⤋
Getting your credit cards under 25% of the credit line will help your credit. You should be paying more than the minimum amount on credit cards. It would be best to pay them off as quickly as you can. If your cell phone bill is in collection and being reported on your credit bureau report, then that is going to also hurt you. I don't think borrowing more money is the answer. You need to get out of debt. A collection item will probably hurt your credit more than having a high balance on your credit cards. I would probably tackle that first. Then I would pay as much as I could on the highest interest rate credit card until it was paid off the do the other one. If you can pay more than the minimum payment you will make progress faster. If it is difficult for you to make more than the minimum payment, then you may want to consider getting another job and use that money to get out of debt. It can take a big burden off of your shoulders when you are debt free. It will take time to get your credit score up.
2007-02-17 22:44:55 · answer #4 · answered by Flyby 6 · 0⤊ 0⤋
well if you are always making minimum due amout then you are stupid cuz you will end up paying a much higher interest rate than you are required to pay. make a rule.. always make ful payment in time when you use credit card.
your rating will automatically go well..
2007-02-17 21:11:39 · answer #5 · answered by GURU 2 · 0⤊ 1⤋