05-14-2011 01:34 AM - edited 05-14-2011 02:02 AM
Apologies in advance if these are elementary questions. I'm currenlty trying to rebuild my credit and had a couple of questions. I currently have an offer to sell my car and pay off my loan. Would it be better to pay monthly payment for another 3-6 mo's and then sell it, or sell the car now and pay it off in full? Same question for my revolving debt. Should I pay off the amount in 3 monthly payment, or just pay it all off now? I know it takes time to repair my score, but I'm looking for the quickest way to raise my score.
I can afford all of my payments, but am wondering what would be the best option to try to raise my score the quickest.
Also, I've had 2 accounts that were over 90 days late. One I paid in full, and the other I'm current. Can I do anything else to raise my score, get some kind of letter or something?
05-14-2011 05:02 AM - edited 05-14-2011 05:09 AM
Welcome to the forum. Revolving a CC balance never helpes you credit score. It is the reported balance that helps or hurts. Always PIF if you can. I would always PIF any debt. even if you get a score it. It may be posible to get the lat payments removed through GW but if not, a 90 late is a major derog and it will effect your score for 7 years until it falls off. Not to worry though since it is possible to have a major derog on your CR and still have a 720+ credit score. I am an example of that.
05-14-2011 10:48 AM - edited 05-14-2011 12:05 PM
Thanks for the input. Sorry, kind of new to this, just wanted to verify. It would help my score the best to pay off my revolving debt. What about my car loan? It would help my score more if I sell the car now, pay off the loan in full vs. paying the monthly payment for a couple of months and then sell/pay off the loan?
I know its best to have the least amount of debt, but if it would help my score more to keep the car loan for a while longer and then payoff/sell, I'd rather go that route.
Just looking for the best way to actually raise my score.
05-14-2011 12:25 PM
Regarding the auto loan, I can't answer that. But regarding the credit card, it would depend. If you are paying in full just so you can close the account, that may hurt you long term. Lack of a revolving account DOES hurt you but not as bad as having a revolving account in a negative status. So the answer would be to maintain your credit utilization at about 9-10%. So if your limit is $300, you should only carry the balance long enough so that your ccc reports a $30 balance, and only then pay it off. I'd say to rinse and repeat every 2 months or so. Sorry if that seems confusing, but I hope it makes some sense to you. On the other hand, if you want to remove all possibilities of accumulating a debt you can't pay later, then by all means, pay in full and either cut-up your cc (won't hurt you)or close your cc account (will hurt you).