What do I pay off first? Collections $ 197, 225, & 450. Or credit cards $510, 890, & 442? Want to raise credit

Question

I want to clean up my credit and pay things off but I don't know what's more important and will help raise the score quickest. The credit cards are active except for the 890. I still get a statement but I can't use it anymore. The 450is from letting a fam member gat a phone in my name and I'm just finding out about the 197 from when I moved over a year ago. I need good advise. I want to buy a home. Thanks.

Answer 1

Collections are best to pay off first because being hassled is a headache. From what you presented, the collections are the most damaging. The second most damaging is the non-active account. You are probably getting charged a high interest rate for an account you cannot even use. Next, target the rest of the credit cards. You do not need to pay them off. First get the balances down to around 70% of the credit limit, then 50%, then 25%.

Keep two non-proprietary credit cards. Proprietary credit cards are gas cards and department store cards. Non-proprietary are Visa or MasterCard. I recommend keeping a balance of no more than 20-25% of your credit limit. Most will say 30%, but at 20-25% you have the extra 5-10% as a cushion for purchases and finance charges.

As you pay the accounts, check your credit scores for inaccuracies. Those inaccuracies can lower your score. My credit score went from a 685 to a 692 after correcting some inaccuracies (credit inquires that were not removed after two years and an open account that I paid/closed). You are entitled to a free credit report per year that has information from all three credit agencies. However, that report does not disclose your credit score. You will need to purchase your credit report through a broker or bank to see your score.

Patience is important. Credit scores do not improve over night or even within a month of improving your financial situation. The financial company still has to close the account, report the closed account to the agencies, and the agencies only update at the end of the month.


Good luck.

Answer 2

I went through this when I was buying my first home. Pay off the collections! And as you pay them off, request a letter stating you "have" paid them in FULL. As far as your credit cards are concerned, ALWAYS pay more than the minimum balance (at least $20 over; otherwise, you'll NEVER (i repeat) NEVER pay it off). As long as you're not behind in the credit cards, you're good to go. It doesn't seem as if you have THAT much debt anyway (unless there are other cards out there). As far as that $450 is concerned, I hope you've learned your lesson! I certainly did. You can love family; but your can't share your credit with them. In these modern times, your credit score is more important than how much you have in the bank (unless you're filthy rich).
I hope this helps and good luck buying your new home; there are very few feelings that compare to stepping into your "own" place.

Answer 3

It is a good idea to payoff those things that you are paying to most interest on. Pay those that show up as bad debt, for example if you can pay $10.00 a month on a credit card and it won't show you delinquent then pay more on the bills that show up as bad debts. Especially important, stop doing the things that got you in debt in the first place. Avoid expensive fast foods, find activities that cost less, at least until you get ahead then budget and get a feel for how much credit buying, if any, you can actually afford. Lock those credit cards away.

Answer 4

I would recommend you contact all your collections and arrange payments with them. It is already in collection so no hurry to let your credit cards interest continue to sky rocket. I say contact the collection agencies just to ensure them you will pay them. Make it so you will pay half on each within 2 months but that is the longest to drag them. Now with the credit cards try to keep your balances 50% below their limits. Anything above this hurts your credit score. So which one to pay off first...no first thinking. Just handle what you can and contact creditors.
Just think about it...if you loaned someone money and they ducked and dodged you, would not that irritate you. But assume they contacted you and told you exactly when they would pay you. Imagine how you would feel. Reassured and at ease.
OH also never pay the minimum on your credit cards. All you are paying is the interest rate therefore your balance never goes down.
Hope this helps!!!

Answer 5

!!!!!!!! PAY OFF ALL YOUR COLLECTIONS ASAP !!!!!!!!


You need to do this first and foremost, or your credit will always be bad. After you have your collections paid, start will you smallest credit card and work your way up to the larget. This way you can still have some money in your pocket.

Its good to have about 2 or 3 cards that are not maxed out, so if you can pay them all off, don't worry aout it. Just make sure they are not maxed out.

Good Luck, and dont forget

!!!!!!!! PAY OFF ALL YOUR COLLECTIONS ASAP !!!!!!!!

P.S. You can bargin with collection agencies. Just tell them "Hey I can give you this much, this is all I have" they will try to make a deal with you. Don't be afraid to ask for help. OK

Answer 6

pay collections off first, those do the most damage, make sure you make your monthly payment on the credit cards in the mean time, when collections is done double up on your credit card bills, try to pay the ones with the highest interest rate off first and DO NOT charge anymore until they are all paid off, then use one card only and keep it for emergencies only.

Answer 7

Anything that's gone to collection should be retired first. Then get rid of the closed account balance. Make sure to keep your credit cards current (don't let THEM become delinquent) while you're paying the other things off.

Answer 8

Why not just include a portion payment in your budget? What will help the best is paying each of them off. It will change their status on your report, which will change your status. Then, when one is paid off, take the portion meant monthly for that one and divide it amongst the remaining ones. Even if you're only paying 50, 20 or even 10/per month, you're whittling it down, right?

Way to go you!

Answer 9

Seek help from a credit counselor that can help you straighten out your credit. It will take time and it wont be overnight that things will change. You are your credit. that is all that a lender sees. Check your credit report.. at least once a year you are entitled to a free credit report.. check out freecreditreport.com And never let anyone have access to your identity even a family member.Even though you mean well you will be the one left holding the bag when they dont pay the bill.

Answer 10

if you pay off collections it doesn't mean that they will wipe if off your credit score it can take a long time for them to get around to doing that for you so I would say pay the credit cards first because you are paying high interest rates on those, you can always call collections and work out an amount you are comfortable with to pay them each month.