Pay Off Credit Card Debt In One Lump Sum Or Over A Few Months

2015NI

Hi folks, I have quite a bit of credit card debt and I'm finally in the fortunate position of being able to pay off the debt in one lump sum.

Is it better for my credit score to pay it off over a couple of months or does it make no difference to my credit score?

I've read it's a myth that paying it off in one lump sum is any better or in any way different than paying it off over a couple of months. if it makes no difference it would save me a couple of months of interest if I paid it all off in one lump sum but at this point I want to do everything in my power to build up my credit rating again.

According to Noddle my current credit score is 1/5 so anything I can do that effects my credit rating in a positive way I want to do!

tallyhoh

credit scores mean nothing, no one uses them, they have their own ways of deciding whether they offer credit to people.

Pay your cards off in a lump sum if you will save on interest.

rockm87

ignore the score.

pay off your debt!

andyfromotley

Even if there were a slight advantage in paying it one way or the other this would be overwhelmed by the improvement of having reduced your debt. Just pay it off, you will then pay less interest and have no temptation to do something else with the money.

blisteringblue

with a score of 1/5 it sounds like you have not been paying them for a while. I might be tempted to try "full and final settlement offers" that way you keep more of your lump sum. The effect on your credit score is going to be the same, they will all be there for 6 years after final payment or default depending what came first.

2015NI

blisteringblue wrote: »

with a score of 1/5 it sounds like you have not been paying them for a while. I might be tempted to try "full and final settlement offers" that way you keep more of your lump sum. The effect on your credit score is going to be the same, they will all be there for 6 years after final payment or default depending what came first.

Any more info on this would be much appreciated!

I've only been paying the minimum payment for the past 1 to 1.5 years, things got very tight financially and I was using my credit card to help pay the bills until December 2014 when I maxed out the credit card. Then I struggled to make minimum payments for the first few months of 2015 and in March 2015 I had one default (which frankly I forgot to pay the minimum amount due to a close family member dying) excuses excuses I know, doesn't matter to the credit card company.

This followed by weekly phone calls from my credit card company hounding me, asking specific details about every aspect of my financial situation. I suppose they where just trying to find out if I was going to default on my entire credit card debt.

So in April I paid the minimum payment again not realising I had to pay double (the minimum payment for March & April) to bring my account out of arrears.

I've not paid for a full credit report yet but will this mean 2 red marks on my credit file for the default in March?

Sorry I really should have started including all of this info.

I might as well include the amount, it's £3,000

Thanks for all the replies so far guys, it's appreciated!

rockm87

you can write to your credit card company (template letters may be on this site somewhere!) and offer them a lower amount, say 50% of your balance, and see if they will accept.

then you can keep the rest of your lump sum.

davidsdesire

i would pay it ALL off NOW for 2 reasons:

1-peace of mind and FREEEEDOMMMMMMMM
2-if you don't pay it now, i am afraid you will find that that money somehow wanders off never to be seen again and you will still have the debt to pay.

I advise you to pay it TODAY. Congratulations!

bennyhill_2

The effect of paying it off in terms of you as a risk (to creditors) is really minimal. Very difficult what to advise without knowing more about your circumstances (do you have an emergency fund already/what's your rough net in and out figures, the age of the old debts/if they're already defaulted and if so when etc).

As someone with a very poor credit score on both noddle and creditexpert I can promise you the credit scores are pretty much just an indication and are in reality meaningless - all you need to look out for are defaults and CCCJs. I was approved for an MBNA card 4 months ago (2 years 0% balance transfer, so am clearing a £3k debt down £200 a month), and just last night was approved for a Virgin money card so will use that to clear down a £3k overdraft over 2 years and £125 a month).

I owe circa £100k but that's from a long time ago, and all defaults have dropped off with the old debts being serviced at 0% with £1 token payments to each currently. By rights and according to all the credit scoring schemes I'm ineligible to get more, but by navigating to creditors I've never had dealings with before I'm starting to rebuild my life, credit history, and will make F&F offers in due course to the old debts (even though from a credit perspective they are no longer detrimental to my credit files, you/I never know when you may need to approach a creditor for help in the future).

2015NI

bennyhill wrote: »

You/I never know when you may need to approach a creditor for help in the future).

I'd like to be able to get a mortgage in the next couple of years but I'm concerned that the default (1 months missed payment in March 2015) will have a significant detrimental effect on my ability to get a mortgage.

Perhaps I have my terminology wrong because the March 2015 missed minimum payment was paid in May 2015, so would that count as a default or just a late payment?

As part of my negotiation with my credit card company, could I request that they remove the default/late payment mark on my credit file for March 2015?

Jacko_amz

sorry for hijacking this thread, i recently joined noddle and was shocked to see my credit score as 1/5 i have manageable debt and never missed a payment on anything, does anyone know why this is?