How Long After Paying Off Debts Before FICO Affected?
I just paid off $30,000 of high interest credit debt and was wondering when i should pull my credit report to see how it stands now. Or should i wait til after i cancel a low credit ($2000) amount and short term (~1 yr open) credit card?
tds :-?
The decision whether to cancel that card is probably pretty tough unless you've had the other cards a long time and have high limits on them.
If it's more than a year old and not $500 or less, I'd be tempted to just sockdrawer it and use it occasionally.
Your FICO score changes daily ... and will go down if you pay off say $30,000 suddenly. If you do it gradually, it goes up as you do it (with 30-60 day lag time to allow for reporting vagaries among the issuers and the CRAs).
Usually after you pay your debts, it takes about 30 days for the credit bureaus to actually report it. For example, if you paid off all your credit card debt right now, and I pulled your credit tomorrow... it wouldn't be affected. The credit bureau's report "monthly". So once it reports that your debt has been paid off, then it will report as "paid" and therefore your score should go up. Depending on when your credit card company "reports" (at a specific period during the month usually the 30th), then you will see it. for example, if you paid everything off the 28th, and it reports the 30th, you should see a change pretty much immediately. If it reports on the 30th and you paid it the 1st, you should wait at least a month. However I would wait between 30-45 days to see a change because if you don't, you would probably keep pulling it every so often to see a change... multiple pulls are bad, and when applying for loans, credit cards, etc. usually require explanations.
If you have the accounts open, then leave them open-closing them can decrease your scores but take them to a zero balance. put them away and use them about every 6 months for gas and such. Longevity is big for credit reporting but so is credit limit versus balance and # of cards used versus # available. Hope that helps! I don't know your score but, you might not get the affect you are looking for immediately just because of balances.
the card i was going to cancel was a $2000 0% (at the time, 12% now) balance transfer that's 12-16 mos old/open. the other credit i was going to cancel was a line of credit that's also $2000 and short lived. sounds like maybe i should keep them open and cancel them at a later date when there's little to no activity.
tds
cancelling them is the worst thing you can do if need be pay them off slowly so it will no effect your score then just put them in your dresser and take them out every 6 months or so and use it but not to go over 20% of the line the longer you hav e the cards the higher your score will go.
Flacorps,
Paying off big balances suddenly can DROP your score??? Wow, I use my credit cards all the time to buy rehab material and have spent $20K some months on the card, but I pay them off at the end of each month. So the balances go way up way down way up way down. This can actually hurt my score???
-Joe :-o
I see a couple of comments here that I have read conflicing thoughts.
Does anybody really know for sure? ? ?
Here is some advice I have heard/read:
1. Close store accounts. They look bad.
2. Get a car loan; it looks good.
3. Do not use over 50% of available balance.
4. Do not use over 70% of available balance.
5. Too much available credit will lower your scores.
6. Have as much available credit as you can to help those ratios.
Well, ? Does anybody know for sure?
I ask because 24-29 mos. ago I bought 5 nice investment SFH's putting 10% down on each. Ever since, I can't get my scores back into the 700+ range NO MATTER WHAT I DO!
I am a perfect payer.
Several of my accounts are near the top; others are untouched...zero balances.
Oh, and when I have paid off credit, I pay it off quickly in full. Does that really hurt ?
ceinvests
I'm in the same boat. 5 mortgages fast, and my score tanked because of the ratios. Never miss a payment and always put 5-20% down. I went from 730-750 to the 650-660 range in no time!!!
-Joe
Quote:
On 2004-10-21 21:15, joemac1241 wrote:
Flacorps,
Paying off big balances suddenly can DROP your score??? Wow, I use my credit cards all the time to buy rehab material and have spent $20K some months on the card, but I pay them off at the end of each month. So the balances go way up way down way up way down. This can actually hurt my score???
-Joe :-o
FICO thrives on predictability. They want to see you going into debt for that set of dining room furniture and paying it off over 24 months.
If you're borrowing and paying off large sums, that reads as either unpredictable income or a hidden line of credit unknown to them rescuing you. Either way it looks bad, and you'll either get no points for it at all or actually get dinged.
Look up the adventures of a poster by the hande of "GEORGE" over on www.creditboards.com.
it's disturbing to me that i re-fi'ed an investment property i had 100% equity in to take 30k out and save myself ~$500/mo in BAD credit. from what i'm reading, fico wise, i'm better off being a slave to debt payments!!
tds
Hey fla..,
Predictability may be an important clue! I may look erratic to a computer. AND, I paid cash for a little foreclosure in Virginia in May, so I took some cc offers at 1.99-4.99 til payoff. That probably hurt me. I don't think their model was prepared for the last 2 years (refi's, cheap cc offers)
Help me find 'GEORGE's saga. I enrolled and searched but cannot find his saga. Thx
GEORGE is all over creditboards. But I think the actual incident happened when he was still mostly over on creditnet (which performs poorly as a bulletin board).
George manages a Wal-Mart ... high income, big annual bonus, and weird FICO results. There's even an acronym "UYGF" ... "Unless You're George Factor" ... meaning strange things happen for him that don't always happen to others.
A representative thread:
http://www.creditboards.com/phpBB2/viewtopic.php?t=28761
Thanks fla...,
Leading me to all kinds of info...
Suggest others with credit questions take a look around. C