Pay off or keep making payments

a4budak · ‎04-22-2019

Long time follower and first time poster here. I started finally taking the control of my finances and credit scores about 7 months ago. In September (2018) my scores ver hovering around 496, 508, 541 and currently they are at 662, 665, 669. My credit card utilization is down to 11% (from 97%). I had 6 derogatory items (6 collections) and it is down to 1 now. Here is my question. Last item was Amazon CC original amount was little over 9K and settled it for 6K with installment plan. If I stick to installment plan I have another 20 months to go. I'm in the position of being able to pay it off now. Would it help my credit to pay it off now or take advantage of interest free installment plan and use the money on something else?

Thanks

pgtackle2003 · ‎04-22-2019

Unless your planning to apply for credit soon (such as auto loan or home loan) I'd personally just continue making the payments. I feel more comfortable having money in savings for any type of emergency. The advantage to paying it off now would be that the account could start to age more. Assuming they're updating the balance regularly, this continues to look bad on the CR as it looks newer. Did they agree to delete at the end?

Remedios · ‎04-22-2019

@a4budak wrote:
Long time follower and first time poster here. I started finally taking the control of my finances and credit scores about 7 months ago. In September (2018) my scores ver hovering around 496, 508, 541 and currently they are at 662, 665, 669. My credit card utilization is down to 11% (from 97%). I had 6 derogatory items (6 collections) and it is down to 1 now. Here is my question. Last item was Amazon CC original amount was little over 9K and settled it for 6K with installment plan. If I stick to installment plan I have another 20 months to go. I'm in the position of being able to pay it off now. Would it help my credit to pay it off now or take advantage of interest free installment plan and use the money on something else?

Thanks

If you have payment plan in place and no additional fees are being incurred, I'd continue paying, but maybe increase payment amount to get it done faster without impairing cash flow. If you're disciplined enough and know you wont touch that money, I would not mess with it.

On the other hand, if your cash flow would not be affected, and you have enough money to cover emergencies that may happen, go ahead and pay it off. You'll be done, and it's quite liberating feeling.

Once your last derog is taken care of, your scores can start recovering.

I would personally be more mindful of my finances than scores.

Anonymous · ‎04-22-2019

^^^ agreed completely. It is very liberating to pay off a debt. I’m awaiting scoring results now as I paid off 6 cards to $0 last Thursday, and took big bites out of the rest of them. I am happy to know that at statement cut Time, each of those six will have a couple dollars of trailing interest to pay and then I don’t have to think about them anymore. They can sit while I focus on the rest. Like Remmy said - if it won’t hurt your cash position, be done with it, but you’re not hurting anything by continuing the plan and you are adding more and more on time payments each month, which is never bad for your history.