It’s been a long journey of boosting my credit score - I’m currently signed up with Credit Sesame and get tons of helpful tips from them on how I can do this more effectively. But my question is - is it better to pay off credit cards slowly or all at once?
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Great Question! According to the research that I’ve done and my experience with helping people remove errors from credit reports, the more you pay and the sooner will reduce your utilization rate the moment it posts (subject to next update of credit reporting) so “all at once” would quicken that for you. The rest of the factors, as you will read in this recap article, are not affected. The sooner you pay the less interest you are paying; however, to avoid needing credit and having to pay dearly for it, make sure to have some liquid savings available and then zap every other dime and dollar to become debt-free. This should help you find YOUR comfort level: https://www.thebalance.com/fac…-credit-score-960527
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If you can afford to, all at once! It stops the bleeding immediately. By bleeding, I mean all the interest that’s tacked on each month. If you can’t do it all at once, definitely cut off the highest interest one first, by paying the minimum payment required on the lower interest rates and throwing the excess on the highest interest one. Once you’ve reached zero balance on a card, just leave it at $0. You don’t need to use it and you definitely shouldn’t close it because closing that account usually results in -40pt or so.
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If you’re just establishing credit, a secured credit card might be good. They usually make you pay a deposit to start the card, then after a certain amount of successful payments, they give you the deposit back plus interest and you graduate to a way better credit card with a better APR.
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@deven @adam thank you, thank you! These are great tips. I actually looked into a balance transfer card to cut out the interest for a certain number of months - that way it holds me accountable to actually pay off the card by that time.
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I was told to negotiate with the creditor , many debts are sold for pennies on the dollar and the credit company sometimes will settle for a lower amount. Can’t hurt to ask, never know what the company will say.
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@briana I used to work for a credit card company! Some of the best ways to quickly boost credit scores.
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Don’t close credit cards, especially your oldest one. Instead you can just shred the card if you never intend to use it. This keeps your credit line open on your credit report.
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Ensure you have enough credit, this sounds counter intuitive but having the right amount of credit in good standing shows that you can handle it and helps in the algorithm, even if you pay it off every month.
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Carry a small balance month to month. It makes that balance show up on your credit report and shows you use your credit and pay bills on time
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Payments over 30 days late show up on your credit report. If you have recent late payments call the companies and see if they will remove it from your report (first time offense) this will not always work but it never hurts to try.
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If you have debt at a collection agency, first send a certified letter asking them to verify the debt, this is the law, they must verify it when asked, a lot of collection agencies wont even go past this because it is too much trouble. Once verified, send a certified letter with an offer to settle the debt, give them a number and add a clause to remove the report to the credit agency. Collection agencies buy debt at pennies on the dollar then add ridiculous interest to inflate the debt. Offer thousands less, they will usually counter with a much better amount then they are asking for.
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Get your free credit report every year. I always do it in December, look for any discrepancies and challenge them. Use the official government site www.annualcreditreport.com
Hope that helps!
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dereks@thepennyhoarder.com posted:
@briana I used to work for a credit card company! Some of the best ways to quickly boost credit scores.
Don’t close credit cards, especially your oldest one. Instead you can just shred the card if you never intend to use it. This keeps your credit line open on your credit report.
Ensure you have enough credit, this sounds counter intuitive but having the right amount of credit in good standing shows that you can handle it and helps in the algorithm, even if you pay it off every month.
Carry a small balance month to month. It makes that balance show up on your credit report and shows you use your credit and pay bills on time
Payments over 30 days late show up on your credit report. If you have recent late payments call the companies and see if they will remove it from your report (first time offense) this will not always work but it never hurts to try.
If you have debt at a collection agency, first send a certified letter asking them to verify the debt, this is the law, they must verify it when asked, a lot of collection agencies wont even go past this because it is too much trouble. Once verified, send a certified letter with an offer to settle the debt, give them a number and add a clause to remove the report to the credit agency. Collection agencies buy debt at pennies on the dollar then add ridiculous interest to inflate the debt. Offer thousands less, they will usually counter with a much better amount then they are asking for.
Get your free credit report every year. I always do it in December, look for any discrepancies and challenge them. Use the official government site www.annualcreditreport.com
Hope that helps!
These are all great tips! Thank you so much! I was always questioning whether I should close one of my cards or not, so now I have my answer.
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@briana It is a balance, you want to keep your credit utilization low, you don’t want to have too much credit, and you don’t want to have too little 
If you have too much then closing an account is fine, just don’t close the oldest one, that is actually a factor in calculating your score (at least in the older models).
I suggest using something like creditwise from Capital One, its free, you don’t have to have an account with them and it gives you tips!
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I was always told to stay away from credit cards. Even as an adult, I had moved out of the house and lived on my own for 7 years without having a credit card. So what I struggle with is lack of credit. I got my first credit card a year ago and then a few months after that, I bought my first car that required a loan. I have a decent score but hardly any history. I guess I just have to play the waiting game?
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All at once is the best way to go! We did it, and we’ve never regretted it for a minute. We’d rather have that money going into the bank every month than into interest to another bank for what we borrowed. After the crash, the banks raised everyone’s interest rates with promises to lower the rates. This wasn’t the case. By taking away that interest payment on what you had borrowed, you’re not only showing that you can get out of debt, you’re showing your disapproval with the way they lied and cheated you for years after 2008.
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Wen Dee posted:
I was told to negotiate with the creditor , many debts are sold for pennies on the dollar and the credit company sometimes will settle for a lower amount. Can’t hurt to ask, never know what the company will say.
Some banks are flexible with this such as Discover. Others such as Chase will not lower your APR. I recently negotiated with Discover and they agreed to do a 6 month hardship at 9.99%, which is nearly half my previous APR. It has really helped me zero in on paying off that debt!
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Briana posted:
It’s been a long journey of boosting my credit score - I’m currently signed up with Credit Sesame and get tons of helpful tips from them on how I can do this more effectively. But my question is - is it better to pay off credit cards slowly or all at once?
There are also credit score stimulators online which can help you when debating how quickly and how much you want to pay off. For instance, you can plug in reducing your debt by $1,000 v. $5,000 and it will tell you how much your score will go up. Great for planning whether you want your money to go towards debt or emergency funds.
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Drumtrip posted:
@briana I used to work for a credit card company! Some of the best ways to quickly boost credit scores.
Don’t close credit cards, especially your oldest one. Instead you can just shred the card if you never intend to use it. This keeps your credit line open on your credit report.
Ensure you have enough credit, this sounds counter intuitive but having the right amount of credit in good standing shows that you can handle it and helps in the algorithm, even if you pay it off every month.
Carry a small balance month to month. It makes that balance show up on your credit report and shows you use your credit and pay bills on time
Payments over 30 days late show up on your credit report. If you have recent late payments call the companies and see if they will remove it from your report (first time offense) this will not always work but it never hurts to try.
If you have debt at a collection agency, first send a certified letter asking them to verify the debt, this is the law, they must verify it when asked, a lot of collection agencies wont even go past this because it is too much trouble. Once verified, send a certified letter with an offer to settle the debt, give them a number and add a clause to remove the report to the credit agency. Collection agencies buy debt at pennies on the dollar then add ridiculous interest to inflate the debt. Offer thousands less, they will usually counter with a much better amount then they are asking for.
Get your free credit report every year. I always do it in December, look for any discrepancies and challenge them. Use the official government site www.annualcreditreport.com
Hope that helps!
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I have not looked at my credit rating lately. This is something I need to make a point to do.
I have learned that since there are so many ways to help increase your score, focusing on one area and taking baby steps has helped me! Right now, I a focusing on minimizing my utilization of credit. I try to pay more then the minimum payment and then not touch the cards! I have already seen significant increase in my score in a short period of time!
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@maries True statement. I have got mine under 10% utilization and that has really helped my score!
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MarieS posted:
I have learned that since there are so many ways to help increase your score, focusing on one area and taking baby steps has helped me! Right now, I a focusing on minimizing my utilization of credit. I try to pay more then the minimum payment and then not touch the cards! I have already seen significant increase in my score in a short period of time!
@MarieS You can feel proud of yourself for doing that. Many people have a hard time with it because their spending is so out of control.
Another way to help boost your credit is, Experian Boost. I’m not trying to advertise or anything like that, just passing on some good solid info.
Experian Boost is free. It uses you electric bill, cell phone/home phone to help boost your score. Just thought I’d pass this on.
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@princealarming Thanks for sharing this tip. I had come across them before but wasn’t sure exactly how it worked. I can see how that can be helpful.
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