What debt to pay off first?

Question

I have some old bills on my credit report I'm trying to take care of.
None of the bills are interest gaining. 1 old utility bill an insurance bill and a couple of medical bills. I am trying to get all of them paid off a soon as I can. Should I pay one off before the others?

Newer bills before older bills dates are ranging from 2003 - 2005 its not a lot of money that I owe only about $700 in all.

Once these are paid what would be the best way to start building my currently poor credit. I have never had a credit card or any type of loan what so ever . Only derogatory bills.

Thanks for your advice.

Answer 1

Start with the newest one and work backwards. The older the debt, the less impact on your score.

Be sure to get the settlement agreement in writing before you pay and don't give them access to your bank account. You can ask that the negative be deleted for payment -- some will, some won't. Most of the ones you mentioned probably will.

You should probably start with a secured credit card. You deposit $x and that's held as collateral for the card. Use it and pay it in full and ON TIME every month. In about 6 months or so you can get a regular credit card.

The most important way to improve your credit is to always pay on time. You are going to need a 2 year consistent, on time payment history to get decent credit.

Answer 2

I'd pay off the insurance first - of the categories you've listed, they are the ones most likely to either a) take action against you or b) at least make a negative report. Then, I'd pay the utility bill, and finally, the medical bills. That's because, in general, the medical profession tends to be more accommodating of people who are in a financial bind, and you can explain those debts away better/more sympathetically than you can others ("Yeah, I've got a few old medical bills from a couple years back - I was going through some hard times....").

As others have said, getting a credit card is generally the best way to begin building credit. Don't get one with a very high limit, so you won't be tempted to over-extend yourself again. Also, you could try taking out a small loan from your local credit union - maybe only $200-$300. Use the money wisely, of course (like maybe to pay for credity counseling or to pay off something with a higher interest rate than the loan carries, etc.) and then make all your payments on time and in full. If you always pay on time and in full, the expense of carrying a little bit more debt with a loan may pay off in the dividend of having an improved credit rating.

Anyway, that's just my opinion. Hope this helps.

Answer 3

If there is no interest building them it doesn't matter which one first, just pick one.
To build your credit get a credit card, but be careful. Use it like a check/ATM card. But pay it off as soon as you use it. Don't let it get out of control.
Never let a credit card go over half the limit. Example if you have a $1000.00 dollar limit only use $500.00. That is the fastest way to build credit. Also beware of you bankrupstcy score that most people don't consider or even know about.
I attended a seminar for building credit and also learned after shopping around that Discover Card has the lowest rates.

Answer 4

first, i would suggest taking care of the $700 debt.

then, one trick to build credit with a credit card is you buy all the stuff you would normally buy (food, etc.) with the credit card and once it shows up on the statement, pay it off! It's a neat way to build your credit and at the same time avoid really huge credit card interest fees

Answer 5

dang... you do need to establish credit. it is not hard. all that you need to do is open a card charge some money (not too much!) and pay it off... full balance for a few months. Voila! you have credit! Good news if you wait about three more years all of those charge-offs will disappear off of your credit report due to the statute of limitations.