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 Posted: Tue Jan 24, 2006 7:45 pm Subject: Paying off debt raising Fico |
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Ok, I know I have asked a lot of questions today but I'm so overwhelmed with all this credit stuff it's ridiculous. So I thank you guys for taking the time to help me ahead of time!
Is it true that when you pay off a lot of your debt at one time your credit score drops? We have paid $650 off this month and I know the creditors will be udating their accounts soon. But I'm worried this will drop his score by a lot.
We had a mortgage lender tell us we should pay off $150 in debt and opne up a credit card with a $300 limit to raise him up 10 points. But we figured it couldn't hurt to pay off more debt while we could.. Will this hurt his credit by us payign this much off?
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kchriste
Joined: 24 Jan 2006
Posts: 27
Debtcc Points: 920
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| Posted: Tue Jan 24, 2006 7:54 pm Subject: |
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| Quote: | | Is it true that when you pay off a lot of your debt at one time your credit score drops? We have paid $650 off this month and I know the creditors will be updating their accounts soon. But I'm worried this will drop his score by a lot. |
OMG, you are thinking just the opposite. This is the best thing that you can ever do to your repayments. Creditors really appreciate receiving their money at one single time. Besides, it does boost up your credit scores. Don't worry on it.
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david
Debt Samaritan
Joined: 04 Jan 2006
Posts: 1269
Debtcc Points: 30164
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| Posted: Tue Jan 24, 2006 8:01 pm Subject: |
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OK, becasue I have been told by lenders that the score drops for awhile becasue there are lessa ccounts on your report but then the score goes back up?
Kinda similar to students, and how they have to establish credit because they don't have any type thing.
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kchriste
Joined: 24 Jan 2006
Posts: 27
Debtcc Points: 920
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| Posted: Tue Jan 24, 2006 8:07 pm Subject: |
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Have you read this page?
http://www.debtconsolidationcare.com/forums/credit-check.html
Your payment pattern is the most important factor in evaluating your credit worthiness. Be regular with your payments and you will see its positive outcome reflected in your CR.
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david
Debt Samaritan
Joined: 04 Jan 2006
Posts: 1269
Debtcc Points: 30164
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| Posted: Tue Jan 24, 2006 8:20 pm Subject: |
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Wow, I didn't know that. My score is 630 and his is 570. Thank you for the information. I knew making payments on time would matter but I didn't think collection accounts were a part of that.
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kchriste
Joined: 24 Jan 2006
Posts: 27
Debtcc Points: 920
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| Posted: Tue Jan 24, 2006 8:22 pm Subject: |
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After you have paid off the account in collection, it will be shown as 'paid collection' in your CR. This gives some boost to your ratings.
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david
Debt Samaritan
Joined: 04 Jan 2006
Posts: 1269
Debtcc Points: 30164
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| Posted: Tue Jan 24, 2006 8:29 pm Subject: |
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Ok well that's good becasue we will have taken care of all the small things and now we can work on the larger items he has.
on a general basis if his score was 570 and we paid of $650 of his $3000 debtby how much do you think his score would get raised by?
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kchriste
Joined: 24 Jan 2006
Posts: 27
Debtcc Points: 920
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| Posted: Tue Jan 24, 2006 8:35 pm Subject: |
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Each credit bureau uses a mathematical formula for calculating the fico scores of the individuals. This evaluates many types of information seen in your credit file. Your information is compared with millions of other past credit reports and then your scores are allotted. So, this way, the credit bureaus use certain formulas to calculate the scoring.
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david
Debt Samaritan
Joined: 04 Jan 2006
Posts: 1269
Debtcc Points: 30164
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