i have two unpaid bills on my credit and i was wondering how i should pay them off...?

Question

one is a department store credit card (1100) and the other is a unpaid portion from an old lease agreement (800) on a previous apartment. should i make payments to both at once (can't afford to payoff balance all at once) or should i focus on one at a time? which way will increase my credit score?

Answer 1

Contact them both in writing, and tell them that you want to pay them, but cannot afford to do so in a lump sum. Offer to make monthly payments of whatever amount you can afford.

Find out if there is any interest accruing on these, and at what rate. I bet that the dept. store credit card one does. I don't know if the lease would - it would depend on what the lease contract said, I suppose.

I would pay them both at once, but I would make larger payments towards the overdue bill that is charging interest. If both are charging interest, but one has a much higher interest rate, then start making as much a payment as you can towards that one, and make a smaller payment towards the other one. If the interest rates are about the same, put the bulk of the money towards the bill with the lowest balance. Once the first bill is paid, put all of that monthly payment into the payment towards the other bill as well as what you were doing before.

But if the interest rates are both horrendous, you might do better to transfer these bills to something with a lower interest rate. If your credit is still good enough that you get credit card offers promising low introductory rates for a year or so, you might get just one of these, and transfer these two bills onto that card.

You still have to have the discipline to make the payment on this every month, and to NOT run up this credit card with a ton of other junk purchases. The goal here is to clear your credit, not dig yourself deeper.

Answer 2

How old are these debts? Have they been sold off to collection agencies?

You might be able to negotiate a settlement for less than the full amount. Start with the lease debt. If you can scrape up $400 cash, offer the lump payment as full settlement. Get it in writing, including the agreement to report the debt "paid".

The store credit card you might still be able to negotiate a lesser amount with a payment plan. But small payments are not what a collection agency will be looking for. You might get an agreement for three payments of $300.

Answer 3

you must do both in the following
1) what is the total monthly you're paying on both currently
2) pay the minimum on one of them & put the rest on the other
3) once you've paid one of them, then ladder the payment onto your other creditor.

lesson, you're still spending the same amount just allocating the monies more effectively. the key is not to use the credit cards as your paying them off.

your credit score is determined by your outstanding balances & on-time payments.

Answer 4

There would be no effect on your credit score if you paid one bill rather than another bill.

You should pay at least the minimum on both to show that you are not neglecting them. Whichever bill is charging the most interest should have more than the minimum paid if you have an additional amount of money,