Credit Score

[jetsmell]

I have two credit cards in the amount of 22,000.I'm seventy-one years old. If I go to a company that will pay it off for a fraction of the amount, I know my credit score will take a hit.My question is how long will it take before my score will recover. I have no plans of buying a house or buying a car soon. My other cards are paid up and will not touch those again.thanks

[bjl584]

I wouldn't worry so much about your credit score as I would about paying off the 22K in debt.
Pay off the balances and your score will fix itself.

Moving debt from one place to another probably won't affect your score anyway

Generally, using debt consolidation services isn't a good idea
Coming up with a plan to pay the debt off yourself is usually a better course of action.

If you can post some more details on your situation there are a lot of smart people here who would be willing to help

[myrdale]

The short answer is seven years. I suspect the company that is going to "pay it off" is actually filing bankruptcy.

Your credit score is composed of several items:

1) Your payment history. Do you always make your payments on time or do you have a habit of missing payments?

2) Average age of your accounts. The longer you have had an account the better.

3) Credit utilization. If you have a credit card with a $10,000 limit and you only owe $1,000 it is better than owing $9,000 as 10% is less than 90%. Similarly though if you owed the same $1,000 on a card with a $2,000 limit, now your at 50% utilization which is worse.

4) Types of credit. If you had three accounts, say a mortgage, personal loan, and a credit card, this is "better" than having three credit cards.

5) Credit checks. This has less of an impact, but if you apply for ten lines of credit over the next week, it suggest you are having financial difficulties and will lower your score.

6) Bankruptcy. Come back in 7 years, until then your credit is done.

7) There are multiple credit agencies: Experian, Equifax, & TransUnion. Some creditors file with all three. Some file with just one.

My personal advice is avoid any short cuts and just do this the old fashion way. Pay the minimum amount each month on the highest balance account and put as much extra as you can afford on the lower account. Once the first account is paid off in full, go after the second.

Also I would suggest you pull a credit report to confirm where your at and confirm there are no mistakes.

[kork13]

Are the credit cards currently in collections? Or are the accounts current and you just want to get rid of the debt? Very different way forward depending on the status of the accounts.

[disneysteve]

I have two credit cards in the amount of 22,000.I'm seventy-one years old. If I go to a company that will pay it off for a fraction of the amount, I know my credit score will take a hit.My question is how long will it take before my score will recover. I have no plans of buying a house or buying a car soon. My other cards are paid up and will not touch those again.thanks

What's the point of your question? What's the goal here? If you have no plans to borrow money, how important is your credit score at this point in your life?

Are you struggling to manage this debt?

[jetsmell]

"Are the credit cards currently in collections?" No. I have no plans of borrowing money for at least the next few years. I can pay the minimum on the larger one and put extra on the other. I have four other cards that are paid off and no plans of touching them.
I just hate to pay for the interest rates.

[disneysteve]

I can pay the minimum on the larger one and put extra on the other. I have four other cards that are paid off and no plans of touching them.
I just hate to pay for the interest rates.

As long as you can afford the payments, I wouldn't trash your credit just to get the balances reduced.

How is your credit now? If it's good, you could try calling each company and asking if they would lower your rate. The worst that can happen is they say no.

If they say no and you do have good credit, could you qualify for a zero percent card? You could use that to reduce the interest on at least part of the debt.

Beyond that, we'd need more info about your overall financial picture to suggest other ways to improve the situation.

[james.hendrickson]

I don't know if this helps add to the discussion or not, but the federal reserve is likely to raise interest rates at the July 27th meeting. It may take a couple of weeks for the rate change to impact people's personal finances, but probably the card companies are going to use the rate increase to charge their debt holders more.

So its likely that any debt you're carrying will get more expensive in the next few weeks.

[jetsmell]

I've decided to pay them off. Thanks everyone for your help in making me decide.

[myrdale]

I've decided to pay them off. Thanks everyone for your help in making me decide.

Jetsmell, it sounds like a wise choice. Be sure to come back and share when you hit any major mile stones if you're paying them off over any extended time, or once they are done with. It might be interesting to also here how paying them off positively affects your credit score if you're tracking that.

[LivingAlmostLarge]

federal reserve raises rates 0.75%