When dealing with a credit report is it better to pay off outstanding charges or medical collections first?
Pay off current credit card accounts first. Carrying balances of more than 30% of your limit hurts your score. Paying off the balance will give your score a quick boost. Paying off derogatory items will not improve your score, unless you can get the item removed. If you have single entry items like medical and utility bills, you can negotiate a pay for delete agreement — you pay $x and they remove the item from your credit file. This doesn’t work for regularly reported items like credit cards and installment loans as the collection agency can only remove what they report. The original creditor’s charge off would remain. Generally, if the debt is over 3 years old, offer 25%; 2 or 3 years old, offer 50%; less than 2 years, offer 75%. Lump sum gets the best deals. Any payment plan must be short term. Get any settlement ageement in writing and do not give collectors direct access to your bank account. Creditors look at more than just your score. They look at your whole credit report. Paid
