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Should I pay all the debt listed on my credit report at once?

Written by paul on September 24th, 2006 with no comments.
Read more articles on Credit Questions.

I have about $9300 in debt that consists mostly of student loans and credit cards. I recently came into a bit of money and now have the funds to pay off al my debts. I am trying to do what is best for my credit score. Should I pay off all my debts at once or continue to make monthly payments?

First you have to ask yourself if you ned to ask yourself if you invest the money will you earn more in interest than what you are paying on your debts? If the answer is no, pay off your debts.

As for your credit report paying off your loan before term looks GOOD for a fixed loan such as a student loan or auto loan! Paying off your installment loans early is one of the best things you can do for your credit. The length of your credit history is important and paid off loans are included.

Your FICO or credit score is a number based on various aspects of your credit report and is provided to anyone who views your credit report to assist them in judging your creditworthiness. Approximately 30 % of your FICO score is based on your current credit usage and considers how much you owe on a current loans, how much of your credit limit on your cards is used. If your outstanding balances are close to your credit limits it has a negative effect on your FICO score and vice versa.

Creditors look at the total amount of the loan or credit limit, the balance owed on it and the closer you are to the limits, the more leveraged you are, and you are viewed as a higher risk . Bottom line, you stand to lose nothing and gain everything by paying off these debts.

Topics: Credit Questions |

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