OT: Credit Question

bombay24 · Nov 27, 2005

While i was in college I took on a lot of credit card debt and developed a rather below average credit rating, although not awful. Now that I have a decent job I have the money to pay off almost all of it, but i have been told that if you pay off all of your credit at once it raises red flags to creditors and that you should pay it off over a period of time. I dont understand this and dont know why one would want to continue to pay the extra interest if he doesnt have to. Can someone with some knowledge here please advise? I appreciate any info that you have!!

Thanks,

b24

dmmd98 · Nov 27, 2005

I have no clue who told you that but whoever did tell you that is telling you a half truth. Pay if all off if you can since it saves you money in interest. It won't raise any red flags nor effect your credit rating in a bad way. Your credit rating by in large comes from two pieces of infomation your income to debt ratio and making payments on outstanding balances. So if you make a good deal of money and have very little to no debt cause you paid it off you'll be fine.

TTinCO · Nov 27, 2005

Isn't ruining your credit just part of going to college?

I've never heard of anything about the single payment setting off any red flags, but it will definitely lower your debt to income ratio, which will certainly help your credit rating.

What it won't do is make any previous slow pays or collection accounts go away. One side note-if you dispute any negative items on your credit report, they only have 30 days to respond, or it gets removed by default. This is a great way to clean up your credit. You can do it yourself, or hire someone else to do it if you don't want to bother-but it's really quite simple.

ZZZSpeedster · Nov 27, 2005

Credit institutions like to see payments over time
It shows you are making your payment time table.....If you make one large sum payment, who is to say you'll have money every month for the next 12 months....

See my point? You are making one large payment, but the creditors don't know that you'll be able to make payments over TIME

Hope it makes sense
Having had previous trouble with you though may be different....I would pay it off in semi large payments over a few months....If it's not dire situation

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