Oh yes! Anytime you can pay off derogatory credit it will raise your credit rating. How much is the unknown. And the prospective lender can and frequently does require you to pay off the old debt anyway. There is a craziness in official scoring that means paying off could have a detrimental effect on the score, but that is true for maybe 6 months. Most importantly it is happening in what might be the more junior and mechanical part of the process of actually approving a loan... many more things will actually go into it than the credit score. So, lets see, if I was a lender, now and 6 months (or even 5+ years)in the future, as how trustworthy do you think I would comparatively rate these two, or desire them as customers: 1) He has not made payments on his previous promises. He still owes others money that he doesn't seem able, or maybe it's interested in, paying. They probably have the right to seize what he owns, or makes as salary in the future. Salary/money, which if he is actually intending to pay me (unlike anyone else it seems), is what he might have expected to pay me with! And those others want to get repaid, and will have a right to an amount that will continue growing by fees and interest charges, so his expenses are actually higher already than he's telling me. I can require he pay off those old debts I guess, but especially if he basically uses my money to pay those off, do I really want to be in the shoes of those he isn't paying now? 2) He seems to have had a tough period and missed payment obligations for some reason, (but that was XX ago / there is an explanation in credit file). Gotta' say s/he really wanted to stay responsible/honorable and worked through it, made good on his promise overall and paid them. He doesn't seem to owe others now, at least not more than he seems able to pay on what he's making.... I don't know about you...but not only would I'd sure have to rate #2 MUCH HIGHER, I'd avoid #1 like the plague!
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The two biggest things that can hurt your credit score are not paying your credit on time and holding too much of a balance on revolving accounts. The best way to bring up your credit score 60 points in 30 days would be to make sure you pay all of your accounts on time and to pay down as many revolving accounts as you can.
Not paying your bills on time. Having high balances that are close or over your line of credit. Having any derogatory (negative) information ie.) car repossession, bankruptcy, written off accounts, unpaid collections, etc.
It can, but is unlikely. Credit scores are roughly determined in the following way: 35% is payment history-meaning specifically what has taken place on all accounts in the last 12 months. 30% is amounts that are owed. 15% is the length of your existing (open) credit history. 10% is the types of credit used. 10% is new credit. So, paying a lump sum on your car loan MAY bring your overall debt ratio down, but paying down any revolving debt under 30% of whatever you have available to you (the credit limits) may positively affect your score more. The best way to improve your scores are to limit inquires, use but manage revolving accounts, keeping the balances proportionately low to available credit, avoiding new accounts, and ALWAYS paying your bills on time.
If there's no paper trail then they "don't exist" as far as credit reports are concerned. Knowing what creditors evaluate is important. Some of the things they look at include: * Your credit/loan application * Your credit report * Your bill-paying history * How many accounts you have and what kind * Whether or not you make payments on time * How long you've had your loans/accounts * Unused portions of lines of credit * Collections actions * Outstanding debt
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Paying off your installment loans (mortgage, auto, student, etc.) can help your scores but typically not as dramatically as paying down -- or paying off -- revolving accounts such as credit cards.
The two biggest things that can hurt your credit score are not paying your credit on time and holding too much of a balance on revolving accounts. The best way to bring up your credit score 60 points in 30 days would be to make sure you pay all of your accounts on time and to pay down as many revolving accounts as you can.
Any open, current account that is paid as agreed will help your credit score. The optimal mix is one installment loan (like a car payment, student loan or mortgage) and two revolving accounts (credit cards). There is no substitute for paying accounts on time. The other factor is the WAY revolving accounts are used. You need to make charges on the cards each month, keeping the balances between 1% - 15% of whatever your credit limit is. The industry term for this is "utilization" and it is THE SECRET to raising credit scores over time. Other factors that may help are paying all accounts in a timely manner, limiting and controlling inquiries and avoiding finance company accounts.
Not paying your bills on time. Having high balances that are close or over your line of credit. Having any derogatory (negative) information ie.) car repossession, bankruptcy, written off accounts, unpaid collections, etc.
account payable
It can, but is unlikely. Credit scores are roughly determined in the following way: 35% is payment history-meaning specifically what has taken place on all accounts in the last 12 months. 30% is amounts that are owed. 15% is the length of your existing (open) credit history. 10% is the types of credit used. 10% is new credit. So, paying a lump sum on your car loan MAY bring your overall debt ratio down, but paying down any revolving debt under 30% of whatever you have available to you (the credit limits) may positively affect your score more. The best way to improve your scores are to limit inquires, use but manage revolving accounts, keeping the balances proportionately low to available credit, avoiding new accounts, and ALWAYS paying your bills on time.
When you pay on account, the entry is Cash - Debit Accounts Payable - Credit
Yes, once you paid them, then you would no longer be in collections. Your credit report should update to reflect that it was either paid, or settled.
If there's no paper trail then they "don't exist" as far as credit reports are concerned. Knowing what creditors evaluate is important. Some of the things they look at include: * Your credit/loan application * Your credit report * Your bill-paying history * How many accounts you have and what kind * Whether or not you make payments on time * How long you've had your loans/accounts * Unused portions of lines of credit * Collections actions * Outstanding debt
Yes, payment history accounts for 35% of your credit score. So paying your bills on time will help you maintain a good credit rating.
Paying off collection or charge offs is NOT SUPPOSED TO reset the DLA (date of last activity). This is the date that determines how long a derogatory account can show on your credit report. You would need to find out the DLA on your specific accounts and follow up after payment to ensure that they are not re-aged. This would be illegal. Better yet, why not offer to pay for removal from your credit report completely?