Credit is one of the most important items that you can have in your life, when it comes to your financial well being. Having good credit allows you to buy a car, purchase a home, get into college, and make everyday purchases. Many times, you will find people do not make the best decisions when it comes to their credit. They may use their credit card too much, or not pay back their loans on time. Luckily, there are ways to help your credit score increase. One of the many questions people ask themselves is “Will paying off my debt help my credit?”
The debt to credit ratio is rather important when your credit score is determined. Other factors such as timely payment, new accounts, and length of credit history also play major roles as to what your credit history is to look like. Also the amount of debt you have acquired will also play a part. If you are carrying a large amount of debt on your shoulders, try to pay it down as quickly as possible.
Contact your creditor right away to see if they have any repayment plans available or other programs that will allow you to pay off the debt as soon as possible. If your creditor will not work with you and you can’t get any assistance from them, you may want to contact a credit counseling agency to help you pay off these debts while still managing your monthly expenses.
The Federal Trade Commission (FTC) recommends contacting a credit counseling agency if you cannot manage your expenses or work out an agreement with your creditor on a repayment plan.
“Just because you have a poor credit report doesn’t mean you can’t get credit. Creditors set their own standards, and not all look at your credit history the same way. Some may look only at recent years to evaluate you for credit, and they may give you credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.
If you’re not disciplined enough to create a workable budget and stick to it, to work out a repayment plan with your creditors, or to keep track of your mounting bills, you might consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But remember that “nonprofit” status doesn’t guarantee free, affordable, or even legitimate services. In fact, some credit counseling organizations — even some that claim non-profit status — may charge high fees or hide their fees by pressuring consumers to make “voluntary” contributions that only cause more debt.”
Read more FTC
So the answer to the question is yes! By paying off some of the debts you have acquired you may be able to increase your credit score a significant amount. It does not matter if these debts consist of medical bills, credit card payments, personal loans, car loans, etc, just make sure to get them paid off! Once these debts are paid off you will see a major increase in your credit score.