Is it better to make monthly payment on a delinquent account OR pay if off?

Question

well my husband has a very old bill that is around $3,600. we are paying $200 a month on it but thinking about paying it off completely around Nov. We are attempting to improve our credit to get a house next year. I think we should continue paying on it to build the score up over time, but he wants to pay it off for the same reason. Help us please.

Answer 1

Could use more info.

Is this debt past due and in collections?  If so, it doesn't matter one bit if you pay all at once or in installments because it's still going to be a bad mark on your credit.

If this is just an old loan you have been paying on, not delinquent....then the next question is what is the interest rate?  If it's high then pay it off if you can.  If it's low, keep paying monthly payments.  It is NOT going to benefit your credit very much by paying it.  The thing to look at would be the total amount of debt you have compared to the credit limits.  Paying the debt will have a very small impact.

Next you need to see what your mortgage officer wants.  If he says pay it off, so be it.  If he tells you that you need a slight improvement in your credit score because you are right on the border of "great" credit, then pay it.  Otherwise keep paying the installments.

Answer 2

Hi both ways will work the same, but if you have to pay interest every month they I would pay it off ASAP the quicker the better when it comes to interest, even if you instead of paying $200 a month may try $300 a month if you can afford it. and then if there is any left over in NOV then pay all remaining. Also you can arrange centrelink to take money out each fortnight if you are on centrelink.

Answer 3

Lauren it is always better to pay off the debt completely. There are a lot of tips and tricks for paying off that debt and having it removed from your credit report.

I own a debt/credit consultation business, it is what i do on a daily basis

Refer to agdebtconsultation.com for more info. We are always here for free advice

Just fill out the form

Answer 4

pay it off

Answer 5

If your husband wants to improve his credit, and you have money in a savings account, get a small secured or unsecured  loan for 24 months and pay it back in 12. you can pay off that debt and increase your credit score at the same time.