How to Pay Off Bills on My Credit Report

Banks and other lenders loan money based on your credit report. When you have unpaid or delinquent bills on your credit report, you credit score is reduced and the chances of getting a loan also are reduced. The first step in improving your credit rating is to pay off those bills. This can seem difficult, but with determination and setting a budget, you can pay off those bills and start improving your credit scores.

Instructions

1

Obtain a copy of your credit report from each or the three major credit reporting agencies: Equifax, Experian and Transunion. You can contact each agency individually, or go online to annualcreditreport.com for a free copy of all three reports.

2

Look at your reports and find the bills you owe. The credit report will show you what accounts you owe, how much you owe and, in most case, an address and phone number for the creditor.

3

Figure out your financial budget. Determine how much you can afford to set aside every month to pay off your bills. The key is setting an amount that you can stick to paying every month.

4

Contact your creditors and ask for current account balances. Then ask about an "Offer in Compromise," which is a negotiation between you and the creditor that can reduce the amount you owe with interest. Creditors that accept an Offer in Compromise probably will require a lump payment in a specified short amount of time. Negotiate the lowest possible payment with the rest of the creditors, and commit to sending that payment every month

5

Pay off any Offers In Compromise that you have agreed to with creditors first. This not only pays off the bill, but often can save you a lot of money over the original debt. However, there is a catch: For any Offer in Compromise over $500, the creditor will send you a tax form. So, for example, if your bill is $700 and the creditor settles for $500, you must claim the $200 reprieve on your taxes. Check with your attorney about specifics.

6

Make a list of the remaining bills you owe, starting with the lowest payoff amount. Pay the minimum amount on all your bills each month, including the smallest debt. When you pay off the smallest debt, apply that money to the next debt on your list.

7

Continue this process of paying off the smaller debts and applying those payments to the next debt, while paying the minimums every month. Although this process takes time, you will eventually pay off your bills.