Credit/Debt Consolidation .. Advice needed?
Question:
Answer:
Yes, it is worth paying those old accounts...and yes a new credit card or car will help raise your score as long as you make your payments on time. You are a do it yourself kind of person so, if you'd like to learn more about repairing your own credit then visit http://www.thecreditrepairmanual.com...
Pay off the old accounts as soon as you can.
If you have smaller balances that you can reasonably afford to pay, then it is generally worth it to pay off accounts that are less than 4 years old. These are accounts that will still be on your credit report for some time.
Until recently, you would be penalized by the credit bureaus for paying on an old account. However, the bureaus have updated their credit score formulas so that you are no longer penalized.
I know it sounds counterintuitive, but the older the collection accounts are, the more damage you will do to your score by making a payment on them.
The credit score calculation formula gives more weight to recent information as compared to older information. And when you make a payment on a collection account, you bring its status to "new" because they're filed by date of last payment. So making a payment on a collection account that's, for example, 5 years old will definitely hurt your score.
It's true, however, that your score will go back up. But if your main concern is getting a better score, you might consider letting them drop off (it takes 7 years) instead of paying them.
keep in mind it take 7 years for them to drop off
but expect a vicious fight in the 7th year as collection agencies make a hard push to collect in the 7th year, worse yet if you acknowledge the debt, the 7 year statute get reinstated from the date of acknowledgement again
Consolidating debt is an ideal way to reduce your amount and tenure of debt. You make a single payment to one lender on a certain date and this will help you clear off the debts faster. But the fact remains that debt
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