Is it better to pay off delinquent accounts or charge offs or to make payments?

I have a few negative things on my credit report. They range from 200-500 dollars. I want to repair my credit and I have $2,000 dollars that I am willing to put towards paying off my debt, so that I can get a credit card (make on-time payments!) and raise my score. I%26#039;m not sure whether I should pay off the negatives in full or make payments over time. Which one would look better to lenders?

Is it better to pay off delinquent accounts or charge offs or to make payments?

Because older accounts will eventually drop off your credit report after some time and have already done damage, the best way I%26#039;ve found to tackling credit report issues is to pay things off in this order:

1) Smallest amounts first (I have a $61 bill on my credit that I need to just pay off instead of going out to dinner)

2) Newest accounts (They%26#039;ll stick around longer and its best to wipe them off while you can)

3) Older, delinquent accounts

You may be able to get the amount down by calling the companies directly and working out a payment arrangement. I%26#039;ve done that on several occasions and it worked for me.

Is it better to pay off delinquent accounts or charge offs or to make payments?

Call the companies involved. See if you can cut a deal. They may actually cut the amount of the debt in exchange for a full settlement. Then if they do, see if they will remove the derogatory.

Is it better to pay off delinquent accounts or charge offs or to make payments?

If those accounts are already delinquent, it%26#039;s already hurt your credit. If you make payments, it won%26#039;t improve your score because those accounts are already past due. The best thing to do is pay off the delinquent accounts. Keeping NON-delinquent accounts current with payments is good.

Is it better to pay off delinquent accounts or charge offs or to make payments?

Pay it off in full for sure. Otherwise, you still have debt compounding, and you still have bad credit. You should always want to eliminate as much debt as possible.

Also, if you pay it off in one lump sum, you will end up paying much less over time, as whatever you don%26#039;t pay off continues to compound and increase.

Is it better to pay off delinquent accounts or charge offs or to make payments?

If you%26#039;re getting collection notices from collection agencies -DON%26#039;T Work with them. Call the original lenders and work with them only. You can send what%26#039;s called a Cease Communication Letter (www.budhibbs.com) to the collection agencies and they can only contact you one more time, after that they are breaking the law and can be sued. Payments (especially to an agency) are never good. Delinquent matters stay on your record for 7 years. and as long as you%26#039;re paying to an agency they keep submitting to the bureaus so that 7 years just keeps going and going.

If you are working directly with the original lenders~negotiate a pay off. They were willing to give up 40-70% of your payment to a collection agency so why not give it directly to you in savings!? Also tell them you want your agreement in writing and it should include that you want your credit report to read %26quot;Paid as Agreed%26quot; on it. They don%26#039;t get payment until you receive that letter with that promise.

Is it better to pay off delinquent accounts or charge offs or to make payments?

One small note about cutting a deal with creditors to pay off your deliquent accounts for a lesser amount - I made a deal once to settle a late bill for about 3/4 of the original amount. I made the payment right then and there, but a few months later I checked my credit report and that 1/4 balance I wasn%26#039;t supposed to pay at all was still listed as deliqent. I was able to dispute the claim and get it removed from my credit report.

Check your credit report, some site let you do this for free, and make sure to dispute any claims you don%26#039;t believe are correct.

Is it better to pay off delinquent accounts or charge offs or to make payments?

It%26#039;s sort of amazing. I%26#039;ve answered this question dozens of times...I know these other responders have read it. They obviously are not impressed with my advice...maybe you will be.

Understand this FACT. When you pay off a debt, all the creditor is required to do is show %26quot;paid%26quot; on your credit report. But the negative information about charge off%26#039;s, late payments and delinquencies will still be there, and it will still be a negative mark on your credit.

In other words, you paid off your debt, but it will not help your credit score one bit.

And here%26#039;s the worse part. When a debt is first placed on your credit, the scoring formula gives it a very high score. But as this debt gets older, it does not look as bad, so the formula give is a lower score.

When you pay off your debt, it becomes a recent activity and your credit score will now reflect it as a new debt. In other words, you pay off the debt, and your score actually gets worse!

Don%26#039;t believe me? There are several mortgage officers who post here that have verified this is exactly what happens.

So what%26#039;s my point? Unless you get the creditor to delete the item from your credit report, paying it off will have no effect (or actually worse) on your report.

So what to do? Put all of your debts in order of priority. Start with the newest debts and contact the collection agent to negotiate a payment plan. They will work with you more willingly if you pay the debt in full. They may offer you a settlement of 30%-50% off the debt, but you will have to pay it all in full.

But insist that they agree IN WRITING to DELETE the entry from your credit report. If they won%26#039;t work with you, ignore them and move on to the next debt.

On your side is the knowledge that they rarely sue for debts of under $500. The damage is now done, you have nothing to lose by not paying the debt. But on their part, they will never collect a dime unless they work with you.

The bad part...if you are trying to secure a mortgage or large loan, you may not have any other choice. The mortgage officer will insist the debt be paid. But just remember that unless it%26#039;s deleted,your score will still reflect the negative information.

Is it better to pay off delinquent accounts or charge offs or to make payments?

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