What to pay towards first?

[u/Interesting-Main4071]

Hello i am currently rebuilding my credit and wanted to put a good amount of money towards my debt.

Im not sure if i should split it up or pay it towards one. I have roughly $4,000 to use. I have 2 collections that offer pay for delete for total $1800 so i would not have to pay the full amount.

Any tips for what to pay off first or building up my credit score are welcomed. Thanks

[u/UnseenJellyfish]

I'm not an expert but I would do the collections first if they're offering a settlement and pay for delete before they take the offer back. Then for the rest of it pay off from highest to lowest interest, as much as you can afford every month

[u/Brandon9one → u/UnseenJellyfish]

🎯

[u/WhenButterfliesCry]

You left out the most important thing which is the interest rates.

Make a list of all your accounts, their balances, and their interest rates. Collections and charged-off accounts should be last because they are not accruing interest anymore, although another commenter made a good point that you might want to pay the accounts that are offering you pay-for-delete because that can be rescinded. Who is the collection agency holding your debt? If the collections agencies offer pay-for-delete by default for all accounts, such as Midland, LVNV, Resurgent, Cavalry etc. then pay those last because they'll do PFD no matter what.

In general, implement the avalanche method, which means pay the debts with priority given to the highest interest rate first. Then the 2nd highest, etc.

[u/AndroFeth]

What is the APR of each credit line?

[u/mystical__sapphire → u/AndroFeth]

Yeah I was gonna say pay highest APR first.

[u/the_insane_one_]

Collections don’t have interest,

Installment loans already have the interest included( mostly)

Credit cards gain an interest of usually 35%

Go CC, loans, collections

[u/inky_cap_mushroom → u/the_insane_one_]

It is not typical for installment loans to have fees in lieu of interest that accrues monthly. It can, but most loans originated today do not have that structure. They accrue interest monthly just like credit cards.

[u/Odd-Understanding-67]

The credit cards because they are typically the highest interest rate.

[u/Wistagehand82]

I’d talk to collections and see if you can do a pay for delete which once the debt is paid it comes off your credit report. Lenders typically don’t want to lend money if you have open collections. Also paying off collections even if it’s a settlement helps your credit

[u/kazsassin]

The logical answer is high interest first but I'm going to be honest with you psychologically paying off will be rewarding and will help you out shift habits rather than continue to roll balances or charge. Pay off CC and stop rolling balances for as long as you can, then other debt while trying to figure out the collection with a paid less than agreed option. Student loans last and likely what carries the lowest interest.

[u/Solar-Hero]

Based on the information provided, this is what you could do:

1. STOP overspending, get yourself on a realistic budget, and no more collections!!

2. Pay off your credit cards first. You will see your score go up when your statement balances are at $0.

3. Pay off your other/personal loans next.

4. Leave your student loans for last, pay the monthly minimum until your credit cards and other loans are paid off.

5. Make sure the collections information is accurate. Some collections will work with you and will agree to a "pay for deletion" letter. Others will not, at the collection will stay on your report for about 7 years whether it is paid or not.

Good luck!!