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Soon I will be making more money and will easily be able to pay off my creditors but I have poor credit right now. Is it better for the credit report if I pay them off in full or if I just ride the loan out to establish a good payment history? Also any other information on how to improve credit will be greatly appreciated.

19 Thoughts on Is it better to pay off your balance or to get a payment history established?
  1. Reply
    julia4evert
    July 24, 2011 at 12:34 am

    If your young I would make payments and establish good credit, if your older and in a lot of debt pay it off.

  2. Reply
    fchaldo@sbcglobal.net
    July 24, 2011 at 12:48 am

    i need points give me best answer thanks

  3. Reply
    Yousef J
    July 24, 2011 at 12:50 am

    pay them right away. That’s better for your credit

  4. Reply
    Oh Boy!
    July 24, 2011 at 1:38 am

    Paying off your balance is the very best kind of payment history.

  5. Reply
    m137pay
    July 24, 2011 at 2:37 am

    Always payoff your balance, soon the creditors will beat down your door!

  6. Reply
    ak
    July 24, 2011 at 3:17 am

    Payment history for now. Watch the interest rates though. And see if you can renegotiate for a lower rate after a year of steady payments. If you can’t get a better deal pay it off.

  7. Reply
    hanzpoo
    July 24, 2011 at 3:40 am

    Pay the loan off or pay on it for 6 months to a year then pay off.

  8. Reply
    Jesseybean
    July 24, 2011 at 4:24 am

    Pay most of it off, get up to date with payments. If you have a credit card, pay it off. It will probably make your limit go up, and then buy something that you have the cash for. That way you can send in the payment right away, and make your credit better. Good luck!

  9. Reply
    kristincoburn21
    July 24, 2011 at 4:39 am

    Pay off as soon as you can but make sure the company doesn’t charge for early payoff. The sooner you pay them off, the less interest you have to pay

  10. Reply
    oddball
    July 24, 2011 at 5:26 am

    Pay them every month and you are establishing a payment history. This will keep your credit score good. Also remember that having a lot of cards is not a good thing when it comes to your credit score.

  11. Reply
    sweetokms
    July 24, 2011 at 5:27 am

    get rid of your credit cards they cost you more than they are worth. If you can possibly, get caught up and stay current for at least 1 yr, it will help on any late payments etc, then pay it off. Late pays are the worst on your credit history, when applying for credit, its not how fast you paid it off but that you did it in a timely manner

  12. Reply
    len
    July 24, 2011 at 6:06 am

    Pay them off. It will go on your credit report as paid in full and it’s good for you. If you really like building your credit history, you could leave a small balance and pay it in small installments for some time. At least this way, you won’t be paying this much in interest and still will be building your credit history.

  13. Reply
    gyvuphays
    July 24, 2011 at 6:41 am

    pay off your creditors now…if you just establish a payment plan with them, as u say your credit is poor…it well remain poor…after there payed off…then buy something on time and never be late on a payment…then you well establish AAA credit…

  14. Reply
    SamanthaDesigns
    July 24, 2011 at 7:20 am

    Pay off all of your creditors and then cut up your credit cards, except for one card. Buy something every month on that card that you know you can pay off when the bill comes. For example, put all of the gas you purchase for your car on that card. Or groceries. Charge purchases you normally budget for, like groceries or gas. The key is never to spend more on the card than you KNOW you can pay off when the bill comes, and have that money set aside so that it’s easy to pay off when the bill does come. This way you establish a solid payment history, but also avoid paying interest.

  15. Reply
    Sue W
    July 24, 2011 at 8:07 am

    I like to pay off my debts as soon as I can that way I pay less interest in the long run and have the worry of the debt for a shorter time. When you are debt free you can then focus on saving and will be able to build up your bank account faster than if you are still committed to the loans. The more you save – the less you have to borrow in future – the more manageble your finances are (especially if you should have the misfortune of loosing your job, for example).

    Whatever way you decide, you will be establishing a credit history and so long as you are seen to pay your debts, have an income and can give good references, you should have little problems with obtaining finance in the future.

  16. Reply
    mrpink
    July 24, 2011 at 8:14 am

    Credit score computation is complex and involves many factors, here are some tips on improving your credit score:

    1) Do not miss a payment.
    2) Do not make a late payment.
    3) Pay off the cards as soon as possible, but don’t close the accounts. Accounts which have been active for longer periods of time help your credit score. Charge a small amount each month and pay it off – every month. You will be establishing a ‘good payment history’, but you won’t get killed by interest.

    In general, the higher your ratio of credit available to credit used is, the better. (i.e. If your credit limit is $ 2,000 and you have a balance of $ 1,500, your credit score would be lower than if the limit were $ 2,000 and your balance was $ 15: you have more ‘unused credit’. This being said, having too many open lines of credit can hurt your credit score, watch how many accounts you have open.)

    I ran myself into credit problems in the past, and unfortunately, there is no quick solution. Just keep making the payments on time, and your score will slowly, but steadily improve.)

  17. Reply
    jen w
    July 24, 2011 at 9:09 am

    If you pay them off in full like some of these people are suggesting you won’t be showing a pmt history. It is better to make larger pmt’s yet on a regular schedule “do not be late” and your credit will improve shortly..good luck and congrats on the pay increase..

  18. Reply
    David H
    July 24, 2011 at 9:52 am

    What are you thinking, jen-w. Paying off balances does show payment history. It shows you can pay off your debt. Remember, debt ratio is also a determining factor in credit scores.

    I keep hearing that closing accounts hurts your credit score. I’ve also heard that leaving inactive accounts open hurts. I am currently researching this facet of credit repair. Most of the credit questions I’ve seen here I have put to the test at one time or another. I recently paid off some accounts and closed them. WE shall see.

  19. Reply
    Classy Granny
    July 24, 2011 at 10:42 am

    Pay a little above the minium that is due, but not the entire amount. Don’t charge more than what you’ve paid in a month or you’ll end up owing more each month.

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