Paying off $$$ on closed accounts?

[Anonymous]

Greetings, all. This is my first post, and I'm happily on the way to a much better set of FICO scores! I've read some great advise on these forums, and I'm wondering if anyone can shed some light on this dilemma...

I've got about $15K in debt. Most important aspect, however, is that it's all in the hands of a credit couseling agency, and all of the related accounts are CLOSED (by the creditors...bummer, but what can you do?). There are about 6 creditors who are on this account. We had some significant hardships that put us in this situation, but "you are where you are," and we're out of those hardships now and are doing much better. The hardships resulted in late payments a plenty and even a charge-off. Again, though, that's history and we're working to clean it all up. What a mess we made!

So, we recently sold our house and with the equity we received we have enough to pay this total debt in full. However, I'm debating two options:

1. Pay the amount due in full in one felled swoop. I'm eager to do this, but only if doing so won't hurt my credit scores as they're finally coming up - all hovering around 600 (if you can believe it...that's an improvement)! This move will result in us being TOTALLY debt free save for two 3-year old auto loans which are current.
2. Pay off a significant chunk now (e.g., 80%) and trail the rest off in 4 or 5 months of smaller payments (~$500/month), but only if this will help me maintain my improving scores.

Of note: the accounts are closed, the average APR we now pay (thanks to the credit counseling agency - which was a God-send) with our monthly credit conseling agency payment is very low (~5%).

Does anyone have any serious advise on this? We'll be looking to replace an existing car in the near future, and would love to buy a home in the next year or so.

Thanks to you all for helping us navigate the insanity of credit reports!!

[Anonymous]

A year ago the DW had one account Closed by grantor and 7 others all did the same thing plus many gave the old Universal default rate.

We paid all of them down- then have made 10 mo payments on each closed acct- 2 of them re-opened
The rest got paid off completely this week-

So She now has 6 open cards and 2 AU's. Way down from the 16 she had. All the accounts were closed in good standing (important) with atleast a year of clean payments.

She did not need to apply for any credit during this time- so it was best for us.

Waiting for balances to update to see if it was worth the extra effort.

[Anonymous]

Nice work! Paying those debts off feels great. I'm just wondering which method of doing so (on closed accounts, mind you) will be most beneficial, if it even matters with closed accts.

[Anonymous]

still waiting to see if it was better to have more good payments (and having the Fico suffer longer) to if they were just paid off.

My guess is that her FICO will be a bit higher by stretching it out-

$ wise- paying them off is the best move.
Closed accounts with a balance still contribute to UTL-

My recommendation is to:
Make sure they are in a ok/current status
and pay them off.

[Anonymous]

Yeah - they've been in current/ok status for about 6 months now - some more. Do you mean pay them off in full?

interesting about the closed accounts being counted toward UTL. I didn't know that - thanks for the heads-up. Perhaps I should get them down to 20% balances with a lump sum immediate payment and then pay them off with the monthlies until they're gone. Hmm...

[Anonymous]

If the accounts are showing negative, you may want to see if the consoling company or yourself can try a payment for deletion on those accounts.

[haulingthescoreup]

nice note, upitfast --absolutely, ANY payment you make should be a PFD --pay for delete. Get in writing from anyone you owe to, on their company letterhead, that they agree that in exchange for your payment of $xxx, they will mark the account as paid in full and immediately remove any negative reporting from all three credit agencies.

The proper terminology is more precise than that, but that is the gist. Search by PFD letter in the search box on these pages. If you pay without this agreement, and you find that you need those negatives removed from your reports, you have nothing but charm and sympathy to get them to do so. Right now, you have leverage --be sure to use it!

[Creditaddict]

I would think, paying in full old closed accounts would be most beneficial.

then open new accounts to keep score rising.

[MidnightVoice]

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upitfast wrote:
the consoling company

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I need one of them 

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upitfast wrote:
If the accounts are showing negative, you may want to see if the consoling company or yourself can try a payment for deletion on those accounts.

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It seems unlikely that a PFD will work with an agreement already in place