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Does it matter if I use them at all or not? I planned on not using them, but if some activity would help I could use them and then pay them off each month.
My bigger concern is the time frame needed to improve the FICO score. Will it increase quickly since everything was paid off?
Does anyone have experience with this?
mikealialex
This is not an easy question to answer.
It will all depend on certain factors
Depending on how often the creditor reports it can be 30 to 45 days before the fact that your balances are all paid off shows.
If you had many small accounts with balances then paying them off will speed up the increase.
I have a friend who always thought he had "great credit" when he pulled his reports he was amazed to find he had a score in the low 600's. This was because he had 23 open accounts with small balances the problem was the credit limits were also low, so this created a higher ratio.
Do you know your current score? Going form 680 to 700+ should be easily met
going from 600 to 700+ would be much harder.
One thing I recommend to folks that are trying to improve or establish credit, is to take one card(preferably one with a great rewards program) and use it for all your monthly expenses. Then pay it in full each month,use the money you would of to pay cash. Just make sure to never go over 50% of the credit limit.
Just my experience but it does take time to rebuild credit. Try to fix/negotiate/settle all your bad tradelines, especially if you have any accounts in collections, past due, etc. Those will hurt you the most. Keep your utilization (% of the money you owe versus the credit line) low. Some people say 50%, others say 10%. So put charges like gas and utilities on your credit card and pay it off at the end of every month. This will show that you can manage your debt responsibly.
At least one credit card that I know of (Wamu) has a free "fico" score based on your transunion credit report updated every month. When you log into your credit card account on their website, there is a tab "credit profile" that reports your credit score. This is a good and free way to watch your score improve. It may not be the same "fico" model that the mortgage companies use, but it can at least provide a baseline.
It's been my experience that several months with steady payment history and no "pulls" or credit inquiries will help improve the scores. Of course, the more time that passes from any negative events, the better. YMMV.
At this point do not close any cards as they will help with the score debt to avaliable ratio. Also great advice never have a credit card over 50% balance ever.
Average reporting for finished loan is around 3 months for Fico to reflect. Average days for score lowering transaction to report zero days.
Average reporting for finished loan is around 3 months for Fico to reflect. Average days for score lowering transaction to report zero days.
I'm hoping thats true, my score has raised nearly 50 points over the last 4 months as I pay my house equity loan down and paid my auto off last month, my credit score has jumped up 50 points. This month I paid down 90% of the loan and a score simulator put out by one of the companies show that it will raise another 50 points when those payments get reflected.. I can only hope that a few months after that it will continue to rise.
Only thought left is, how much of a home equity balance do I leave to maximize my credit score. Paying it off, closes the line of credit (I assume) raising the percentage of debt to equity open.
Only thought left is, how much of a home equity balance do I leave to maximize my credit score. Paying it off, closes the line of credit (I assume) raising the percentage of debt to equity open.
Is it a home equity loan or a home equity line of credit?
Does it matter if I use them at all or not? I planned on not using them, but if some activity would help I could use them and then pay them off each month.
My bigger concern is the time frame needed to improve the FICO score. Will it increase quickly since everything was paid off?
Does anyone have experience with this?
The advantage of continuing to use the card and pay it off every month is that a creditor may decide to increase your credit line (very much depends on the bank--some subprime cards never increase credit line)which will in turn help your ratios also. My credit was somewhere in the upper 500s or low 600s when I first started trying to get my credit back on track. It didn't take too long for me to get it in the upper 600s and then slowly into the mid 700s.
Is it a home equity loan or a home equity line of credit?
Its a home equity line of credit, where I can write checks out of it as needed. Paying it down has substantially raised my credit score because of the debt ratio.
The advantage of continuing to use the card and pay it off every month is that a creditor may decide to increase your credit line (very much depends on the bank--some subprime cards never increase credit line)which will in turn help your ratios also. My credit was somewhere in the upper 500s or low 600s when I first started trying to get my credit back on track. It didn't take too long for me to get it in the upper 600s and then slowly into the mid 700s.
I am in the upper 500's now, and would love to be in the 700's in time to find a mortgage and buy in June. I am just not sure if I have enough time to see the Score move fast enough.
I am in the upper 500's now, and would love to be in the 700's in time to find a mortgage and buy in June. I am just not sure if I have enough time to see the Score move fast enough.
In another post you said the high balances you had was the only thing affecting your score. If there are no past dues or negative "issues" you will probably see a nice increase.
Which report did you get? I have actually found trans Union to most times have the lowest score.
I would wait at least 45 days to make sure the creditors have all reported the pay offs, then go into the lending institute you have a relationship with and tell them you want to buy a house in June.
They can pull all 3 reports and review your credit with you. You will also be able to make sure that it is showing everything paid off.
What kind of credit limits are you showing on the cards? You can DM me if you don't want to post the info. The reason I ask, is if you are sitting with 4 or 5 cards with very high limits ($15k+) and many small limit accounts. You might want to revisit closing some.
Just to let you know these suggestions and advise is from 30 years in the credit industry.
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