What's the best solution for paying off debt?

Question

I hear that even if you pay off your old debt it does not help your credit score, is that true? Is it better to go directly to the company pay them or go through a debt consolidation company? I need help fast, I'm trying to raise my score.

Answer 1

Having less outstanding debt (paying off debt) DOES increase your credit score. Closing down credit cards/accounts does not and this can actually hurt your credit score.

This is what you can do to increase your credit score:

1) GET A CREDIT REPORT. You can obtain a free one (if you hadn't gotten one already this year) at :

https://www.annualcreditreport.com/cra/index.jsp

No credit card needed.

2) DISPUTE any negative items on your account. Remove any bad marks that appear on your credit report.

3) Pay down your debt burden. If you want to consolidate to one credit card, you can do so. But leave your other accounts OPEN. Closing accounts can actually HURT your credit score. Pay off any bills that you can. Sell unused crap on eBay for extra money to pay bills down. If you have low/no debt, you will look good.

4) If you have no credit cards and your credit report looks "OK", try applying for a gas station credit card. They are quick to offer a low balance to new members. After 6 months, you will have increased you score. Do not go crazy, just get one card. Then, check your credit score (you have to pay to find that one). If all info is correct (a wrong address will screw you) then apply for a mastercard/visa. After 6 more months, you will have improved your credit drastically.

Raising your credit score quickly is not an easy thing to do. But if you do what I've said above, you should go up from a mid-500's to low 700's in the course of 1 year barring any negative information on your credit report.

If you have great credit and just have high debt, just pay down all your debt and you'll have it made that much faster. Cut out the restaurant meals for awhile, be thrifty on gasoline, and pay all the extra money you can get your hands on toward bills.

Debt consolidaton companies are often shady, so watch out. Some good debt consolidators will roll your credit card debts into your bank loan mortgage so you are paying less interest on the debt so you can actually save money. If you don't have a mortgage, you shouldn't even consider it.

Now, if you have a CAR you could try to contact your auto loan bank and extend the loan out as well. The monthly payments will be reduced and the loan may be extended a year longer. I've known people who have done this. It is better to pay off debts if you can.

You need to provide specifics to a question like yours and you may not want to publicize your personal info (with good reason).

I hope that I helped at least a bit.

Good luck! I just managed to get a new vehicle and that's pretty much all that I am in debt to.

If you want to live smart, you will never buy anything that you can't pay off without getting charged interest fees. (It is fine to make installation payments if interest is not added). The only payments most people will have to make is a house payment, car payment, and utility bills. If you can elimate a car payment: GREAT!!!!

There are other more drastic options you can take to eliminate debt as well. Perhaps you have a car that you owe $5000 on. If the book value is $5000 and you can get $5000 for selling it, you can try to do so and release yourself of the payment burden. This will improve your credit score.

I don't know what your goals are, but most of the time people want to improve their credit score when it comes to BUYING A CAR, BUYING A HOUSE, applying for a CREDIT CARD.

If you are raising your credit score just so you can get credit cards with good limits to start going nuts, DO NOT DO IT!

:)

Answer 2

These days, you need to make sure that you pay over the minimum payment expected. If you only pay the minimum, the companies can now increase your interest simply because by paying the minimum you will never get out of debt. Keep your debt on cards at about 35% of your total line of credit. Do not pay it off, just reduce. This way you are showing that you are not a credit card abuser but you want to keep a balance and pay on time so that the credit score will be higher. Keeping a minimal balance and paying on time, will raise your score because you are seen as reliable. Do not do a debt consolidation if you can avoid it. Debt consolidation is almost as bad as bankrupcy on your credit score.

Answer 3

Dave Ramsey has a lot of good advice on the topic. He has books and a radio show geared toward doing just this. I'd say the best way to raise your score is to pay your bills on time every month. Keep your balances at less than 50% because it shows creditors you don't NEED the money. Pay off cards with the highest interest rates first.
DON'T go through a debt consolidation company. Most of them are shady and they REALLY mess up your credit, sometimes just as much as a bankruptcy would.

Answer 4

"Going for online debt consolidation is a good option, you need to take into account the fee charged by the debt consolidation companies.

When you gets into a debt trap it becomes difficult to get out of it. Taking more loans to repay the debts leads to more stress and financial crisis. Finally, there is no option but to adopt debt consolidation, which leads to a new llease of life. Many people receive abusive calls from debt collectors and are stressed. Hence opting for debt consolidation is the number one solution and helps to overcome abusive calls and be free from mental stress."

Answer 5

Listen, paying your debt will increase your credit score. I would do it yourself and save the monthly fees a debt consolidation company will charge you. Also, everything you need to repair your credit is at...
http://www.thecreditrepairmanual.com

Answer 6

I would suggest you to join a debt settlement company who will negotiate with your creditors and bring down your principal debt by around 30% to 70%depending on your credit companies.

You can make affordable monthly payments and be out fo debt within 3-36 months. There are no hidden costs and upfront fees associated with the monthly payment option. Once you are in the program, they will start working on your credit cards in 24 to 48 hours.

Check out this debt settlement company who has helped with the unsecured debt situation.

http://www.debtfreeafterall.com

Good Luck

Answer 7

u need to pay off your debt, even if its old because it makes your credit look bad.. and if someone looks at your credit and see that its paid off it looks better for u and it takes 7 years from the date u paid it off in full.. so good luck