why should i pay any of my debts?

Because it stays on your credit report for 7 years, and gives the orginal company grounds to obtain a judgement, garnish wages etc.

If you want to apply for a loan/car/house/mortgage it could prevent you from buying any of those. And while in the interm it may negatively affect your credit report, if you pay it off, they must update your credit report with "paid". and usually within a few months of that your credit score goes up.

picture this--you have five debts on your credit report. All are past due and in collections....


two years from now, you need to buy a car. you pick out the perfect one--even down to the color of the floor mats. then, you go into the business office, and there's no F-in way they are gonna get you financed.

OR....you have those same 5 debts, in collections. you pay them off. and two years down the road, when you walk into a finance office, you can at least hand them 5 letters showing that you paid the balances, and you can tell the finance guy that this is ironclad proof that you have gone out of your way to handle your financial responsibilities. the finance guy's gonna be on the phone to the banks, telling the adjusters from the banks that you have these bad marks on your credit, but you have a "paid' letter for each one.

Now, imagine youre a banker. which one of those two people would you rather lend YOUR money to?

Good post^^^^ guest!

hmm, it just seems to me that, using the example by guest, the bank is not going to lend either one any more credit. It seems to me that both examples are the same, in the eyes of the bank but maybe I'm wrong.

But sometimes it can make a difference. I needed to borrow some money at the bank a few years back. I knew I had some bad things, bad debts etc., but I had cleared them up and finally had them paid off. I explained to the loan officer the financial mess I had been in, but that I was paying and had paid my debt off. She hesitated some, but because of having had a loan with them years ago, and she said she could see we were trying to clear up our debt, she loaned us money-not a big amoount, but still loaned it.

Besides, having it paid off takes alot of pressure off of you, and you don't have to keep worrying if they will come back next year or the year after to collect..karen

Paying off an account is great, but if the collection agency is in the "public records" section of your credit report, where most of them go, it will not increase your credit score.
Unbelievable, but true. (Does anyone know why this is?)

Most lenders nowadays just go by the credit scores and will not even see the collection agency entries, only the score.

busguy, I am not sure what credit youre talking about but that is false. Go try to buy a car or a house, and you will find that youre sitting in an office going over your credit report with someone who handles financing. it is then that person's job to "sell" you to the lenders. so, they typically go over your credit file with you, asking about the bad credit entries. And like I said before(I wasnt signed in when i posted as guest above), when you can show that finance manager "I paid those off, and here are letters showing those balances as paid" or "here are the receipts from when i paid those debts off....", you stand a far better chance of getting an approval. Of course it depends on the economic conditions, and your interest rate will most likely still be higher, but it can very easily be the difference between being approved and being declined....

wow, you dont sound too much like a bitter debt collector, do ya???

Anyways, ignore that advice from tnaknak...it is very bad advice. "Dont pay them, it doesnt matter"???? "Might as well just save"???

Who is this guy kidding?

OK, look--if you do not pay your debts, and you "save" now, youre just going to have to cough up those assets when you get sued over your debts and they get judgments against you. then, they will look into garnishing your wages, and attacking your bank account where you've been "saving" your money. Guess what--you wont have that money any more!

The only thing that this person said that I agree with is that people should save their money instead of wanting everything right now whether they can afford it or not. As a general rule, I view credit as something to fall back in if I need to, not something I want to use every day like a habit. When you use it, you pay it right back, and that way you never have a debt collector hounding you for money. If I do not have the means to buy something, i dont want to use credit to get it for any reason. its that simple. that is the only way to get yourself out of the credit crunch--to not depend on credit to survive every day. Of course, some things are different--most people will have to get a mortgage because they cannot whip out a stack of cash to buy their house. but mortgages are only part of it--you guys would be flat-out surprised if you saw how many "poor" people, who live off of government checks each month, have nicer things than many who work hard every for a paycheck. i have seen people who live in the worst busted houses, but drive expensive cars with chrome 24's on them, flat-screen television, PS3....the list goes on and on. and many of them dont care--they dont think about paying it all back because they live for that government check....

Look.....skydivr is 100% correct...me and my ex husband were trying to get a house..some debts on his report were holding it up....they told me specifically..pay them give us the proof you did...and the house is yours....in this economy alot of people have bad debt and bankruptcys due to the mess going on...if you had circumstances i.e. lost job for months or a sick family member you were helping...those are issues beyond your control sometimes....and they dont know if that was the case or not..so if you have old debts that you paid off..you made good on them...showing you are responsible with good financial character and they will give you a break on that...if you have old debts you blew off...you look like a repo possiblity to them.....this isnt brain surgery folks....bad things happen to good people...good people make good on their responsibilties....

if you ever want to own your own home, car or anything else of value that's why you pay off your debt. i know it's takes a long time to see the benifits of paying on old credit cards especially if you know that their is something better you would like to spend your money on at that time but to me the best thing you could ever have is a place to call your own. thats why i'm tring to get out of debt.

Its been my experience that apart from mortgage loans, a computer calculates your score, and that is all that gets looked at. Mortgages will work it out, because they have a house worth more than the loan they can take back if you default. but any unsecured credit, and every car loan I have applied for doesnt care one lick. Yes I pay my debts, but only to the original creditor. If they write it off and sell it to a collection agency, then the collection agency gets nothing. never been sued or garnished, but then again I havent had anything over $1000 go to collections.