Which way is better to raise credit score?
I have around $3000 on my credit cards and very low credit score. i will be getting the sam eamount in my refund and was wondering which way would fix my credit quicker, to pay the whole amount on cards at once and bring it to zero or make larger adn on time payments over few months
Well, if you pay over time, you are probably going to pay a pretty outrageous amount in interest. One factor in determining credit score is how much OPEN credit you have that you aren’t using. So say one person has $10,000 credit and is using $2,000 of it. They would have better credit than someone with $10,000 credit using $7,000 of it, in general.
Also, open more credit accounts, even if you don’t plan to use them. This will increase your credit rating (as long as you’re not abusing the accounts). Don’t open too many at once or your credit will go down. But you could open two new ones this month, no prob. You might want to make a couple small purchases with the cards because then you will be reported as a paying and up to date customer. When you apply for your new cards, be generous when stating your household income. They don’t check it anyhow. Don’t say you make ten million dollars a year or anything but…
March, 25th 2010 at 3:09 am
Pay it all in full
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March, 25th 2010 at 3:39 am
Make on time payments over a few months. That’s a big part of credit scoring.
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March, 25th 2010 at 4:20 am
Pay it down so that you only owe 40% of your total credit limit and then pay the rest off at $100 a month.
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March, 25th 2010 at 4:50 am
I agree to pay it in full, but if you have a low score, most likely you have a high interest rate. So paying it off is the cheapest for you. But as a general rule, you should always pay more than the minimum payment (if it is $40 minimum payment, pay $80). And paying the minimum is the worst option to pay anyway.
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March, 25th 2010 at 5:34 am
Well, if you pay over time, you are probably going to pay a pretty outrageous amount in interest. One factor in determining credit score is how much OPEN credit you have that you aren’t using. So say one person has $10,000 credit and is using $2,000 of it. They would have better credit than someone with $10,000 credit using $7,000 of it, in general.
Also, open more credit accounts, even if you don’t plan to use them. This will increase your credit rating (as long as you’re not abusing the accounts). Don’t open too many at once or your credit will go down. But you could open two new ones this month, no prob. You might want to make a couple small purchases with the cards because then you will be reported as a paying and up to date customer. When you apply for your new cards, be generous when stating your household income. They don’t check it anyhow. Don’t say you make ten million dollars a year or anything but…
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March, 25th 2010 at 5:41 am
Pay most of it off leave yourself a cushion of money in case you need it. I’d say pay all but 5-10% of you debt and then pay the rest off in 2-3 monthly payments. Meaning pay about 2700-2850 off and then make payments on the rest to bring it down in 3 months. Neither will build your credit up faster, but they both will add some points.
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March, 25th 2010 at 6:11 am
30% of your credit score is your debt to credit ratio. the best score you can have here is if it your owe less than 25% of your credit limit.
As long as none of your credit cards are in collections or canceled or anything it won’t hurt to pay it all, because at lease you won’t owe.
If some are in collections or canceled negotiate a pay for removal of negative credit information.
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March, 25th 2010 at 6:53 am
What I would do is put that money away as if you had put it all down on your $3000 balance. This way you know you can pay it off with no problem. Next, I would double, or even triple your payments to that debt. This way, you will look like you have no problem paying off your debts to the creditor and you will be keeping the loan longer, which they would much more prefer. If interest isn’t a concern to you and you’re purely looking to increase your credit, this would provide the most solid credit platform in my opinion. Also, keep in mind that credit utilization is a major factor in determining one’s credit score, perhaps more so than credit history. There is a trade off no matter what you decide. Running a credit simulator isn’t a bad idea either. This way, you can see "what would happen if…". I have been using http://www.creditkarma.com for years and have been successfully increasing my credit score quite significantly based on the tools and tracking options there.
The end summary here though is that I would recommend putting that money away as if you put it all down on this $3000, then make double or even triple payments over the next few months. Credit history is a wonderful thing. (It’s much better to see paying over and above the required amount for longer than to see you "winning the lottery" and hurrying up and paying your debt off.
Hope this helps.
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March, 25th 2010 at 7:39 am
No question, pay in full is better for your credit. It’s also better for you, financially, because you’ll pay less interest. And of course, if you can avoid charging the cards up again (only charge what you can pay off at the end of the month), that will help tremendously over time.
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March, 25th 2010 at 8:08 am
Pay them off
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March, 25th 2010 at 8:29 am
I say pay it all off. But if you choose not to pay it all… make large payments to all accounts so the remaining balance can be paid off in a few months. Without question, pay enough now to reduce the balances to less than 30% (25%?) of the credit limit.
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March, 25th 2010 at 9:15 am
?redit repair work?d fine to fix my credit. They disputed and removed lots of bad items from my credit report. I used this service – credit-report-free.totalh.com
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