Advice on best way to pay off credit card debts - The Bills.com Blog

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Advice on best way to pay off credit card debts

Question: I am going to start paying off some creadit cards soon in the up coming year. Should I pay off the balance all in one shot or should I pay it off little by littel to improve my creadit score? How long will it take of good payments in order for my creadit score to go up? i will likw to by a house once Iam completely out of debt but I don\'t know what my creadit history is going to look like in the end. I have some cards that I have been able to pay on time which are in a consolidating company and I have some that I have not been paid in about 3 months and are about to go into collections. Please help!

Answer: I suggest that you pay these cards off as quickly as possible?in a single payment if you are able to do so. While making payments over the course of several months may increase your credit score, every month you carry a balance on these cards you are being charged interest. By paying the accounts off in a single payment, you can avoid paying this additional interest, which could add up to hundreds of dollars depending on the balance of your debt. Once you have paid off your debts, you can keep one or two of the cards open, make a few purchases each month, and then pay off the balances at the end of each month. By paying the accounts off every month, you will be able to obtain the credit

benefits of creating a positive payment history without paying the excessive interest charged by many credit cards.

You should keep in mind that in addition to payment history, the amount of debt you have relative to your available credit is a key factor used in determining your credit score. Paying off your current debt will lower your debt-to-credit ratio, which should improve your credit rating. The delinquent accounts (the ones in consolidation) are likely pushing your score lower, so I encourage you to resolve those accounts as quickly as possible. If you cannot afford to pay off all of your credit cards at once, you should focus on paying off the delinquent accounts, then start paying off the remaining accounts as you can afford to do so. Once you have paid off the three current accounts, you can continue using them and paying them off each month to build your positive payment history, as mentioned above.

To learn more about credit, credit reports, and credit scoring, I encourage you to visit the

Bills.com Credit Information page at http://www.bills.com/credit/. In addition, since you want to purchase a home, I invite you to review the Bills.com Home Purchase page at http://www.bills.com/home-purchase/. If you submit your contact information in the Bills.com Savings Center (https://www.bills.com/mortgage/purchase/), we can have several pre-screened lenders contact you to discuss the mortgage options available to you. By finding out the lenders? loan requirements, you can determine what credit rating you need to achieve and begin working toward your goal.

I wish you the best of luck in resolving your credit card debts and in your plans as a future homeowner.

I hope that the information I have provided helps you Find. Learn. Save.

Best,
Bill
www.bills.com

Also, make sure to get a free financial health check-up with Bills IQ!

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Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!

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