Is it better to pay off new debts like credit cards instead of old credit card bills,phone bills and the such?

Question

My mom has bad credit soto boost her score would it be better for her to apply for a credit card and use it to her advantage by paying all the bills by the due date. Like will it show on her credit report that she is now more responsible with money then in the past to sum things up and begin to build her credit back up????

Answer 1

What you need to do to get yourself out of credit (we all know it's not your mom) is to eliminate your biggest debts. Pay what you HAVE to, like rent and phone, then start paying as much as possible on your highest % interest rates. These are almost always credit cards. Try to eliminate as much debt as you can before you try to start building credit. YOu can use a budget to track where your money goes and you can start saving to pay off those big bills. AFTER you've gotten rid of some debt, start working on the past due bills. As long as you don't get your heat turned off, you'll be okay with those.

Good luck!

Answer 2

I'm not an expert, but I would say that it's better to pay off the debts you already have in slow, steady amounts rather than to use a credit card. After all, you will still have to pay the credit card people. Also, if your mom already has bad credit, if she is even able to get a credit card it will have really high interest rates. If you can show a company that you are really trying to pay of your debts, even if you can only pay them a little bit at a time, they appreciate that more than if you don't pay at all. Try to help her reduce the bills as much as possible by not using services that she doesn't really need. It might not be fun for a few months, but in the long run she will be much better off.

Answer 3

Until she pays off her exsisting bad credit, she will not get good credit. The only time something is put on your credit report is when you miss payments frequently(usually over 90 days). It is never put on your credit report that you pay your bills on time. It is assumed that you do pay your bills on time, until something shows up on your report.

If your Mom pays everything off(I suggest getting a loan to consolidate her debt, with a lower interest rate, and she should maximize her payments by paying weekly or bi-weekly) then she should apply for a credit card through her bank. If she makes an appointment with a credit specialist, they can try to help her get a card( if she tries before paying everything off, she will probably be turned down, and the fact that she has applied for credit again, will actually bring down your Mom's credit score, even if she doesn't recieve the credit card. The best way to build up credit, is to start small.
Basically, after she pays off her debts, she will have a zero score. It will be like starting from scratch. She should apply for a walmart card(zellers,sears, home depot, etc.). A department store card, with say a 200-500$ limit. She only has to use it once per month and pay the whole total off once per month, before the due date, and she will be able to create an A credit score (750). I hope this answers your
question.
I know it is tough to understand, but if your Mom just pays the Minimum balance on what she owes, it will take her forever to pay and the interest would end up costing more than the principle(purchases). It really is best to get a loan to cover the whole amount owing and pay off the one big total, instead of a bunch of little totals. She will get nickeled and dimed to death.
I hope every thing works out for your Mom!

Answer 4

If your mom has bad credit chances are she won't be able to get a credit card. And robbing Peter to pay Paul is not a responsible way to get back on track.

Depending on what the statute of limitations are in your state, she may not want to pay them at all. For example, if the statue is 4 years and she hasn't paid the bills for 3.5 years, in 6 months she is no longer responsible for the debt but if she makes 1 payment towards it the clock starts over from that payment. But if the debt is relatively new then it's to her benefit to pay them off.

Answer 5

Utilities bills should be paid in full on presentation. Credit card bills can be paid with the minimum payment, but the finance charges will eat your lunch until the bills are paid off. Once you get a handle on the situation, pay credit card bills in full every month.

Answer 6

Both. Her credit will never be good with the negative info... she needs to start paying those.... then she can start rebuilding with a sub-prime credit card.

The #1 thing that will help is paying off the old debt. Start calling the creditors, 1 by 1, and offering settlements to pay off the old debt.

Get any agreements in writing, and DO NOT give them bank info over the phone.

Answer 7

No, using credit cards to pay old credit cards is not a good idea. It will show on her credit report that she has even more credit and if she already has bad credit, that will not look good.

Answer 8

Pay the oldest first, or it will not matter what she does with the new...those will still show up as later and later.

Financially, if all were equal, you should pay the highest interest off first. In this case, if you have to choose though, I would pay off the older.

Answer 9

Yeah, she should get some more credit cards to pay off the old ones. Then when they get full, she needs to get some more. That's the way it works and you constantly get more free money..