If you’re looking for options to pay off your overdue debts, chances are you’ll run into something like “Pay to Delete.” Note, for example, that a full statement can have a negative impact on your credit rating. If the creditor reports these late payments to credit agencies, the damage to your credit rating is worse. It is another key factor in deciding whether paying off debts is better than paying them in full. Although paying for your balance in full may be better, you may not have the financial means to do so.
Does
full payment increase creditworthiness?
Carrying a balance won’t help your credit score, so it’s always best to pay your balance in full each month. A collection account is an entry on your credit report that indicates that a previous obligation has not been met. However, a common misconception is that paying off your debts increases your credit score always and immediately. Late or missed payments, high credit card balances, debt collection and judgments are major critics of creditworthiness.
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Barry Ritholtz is a renowned finance expert, author and blogger. With over 30 years of experience in the financial industry he has gained a reputation as a thought leader and influencer in the investment community.