Best Way To Use A Windfall To Improve Score

Comments(4)

• 
  active_re_investor1st March, 2004

  You did not indicate if you are behind in your payments or not.
  
  If you are current and there are no pending collection actions, the answer might be quite different.
  
  Experian has a simulator where you can play around with your actual situation. You will find that some things you might do have little impact while other actions make for a large change in your score.
  
  Also realize that once you are over a certain score the loans that are possible will not change much no matter how much better your score gets.
  
  If you are buying a home, the loan-to-value matters a great deal. Large down payments (small LTV) can make up a lot for a bad score. Hence you might find that making sure you are current and can manage the credit payments is all you need to accomplish. By this I mean that if you have bills that you can handle, a larger down payment might be more useful in getting a good loan than paying down the debt further.
  
  As a general rule, showing that you can handle credit over a long period of time is the best.
  
  You also need to look at things from a personal level. If you sleep better with less debt then paying more off might be a plus. It will help the credit score less but it might be better for you.
  
  John
  
  PS. If you need the URL for the simulator let me know and I can go look for it. It has been about a month since I last used it.

• 
  libertyproperty1st March, 2004

  Paying down debt, especially credit cards improves the score. Lock the cards in the safe for a few months and keep the available credit high and the balances at zero.
  We've all heard the comment "The bank will loan you the money if you can prove you don't need it."
  Having credit lines you don't use builds the fico score.
  With that all said, the easiest "score" to improve and control is a problem solving ratio (score) using "subject to" solutions. Good credit is optional when motivated sellers are involved.
  No matter what your fico is, you can always proclaim: "You oughta see my credit report... it's unbelievable! "

• 
  tinman17552nd March, 2004

  when determining creditibility, it is better to be at 50% of the limit or less. It is better to have 5 accounts that are being used and paid on a monthly basis than 10 not being used. Credit is based on depth and history.
  
  Lori
  
  
  
  [addsig]

• 
  tytitan2nd March, 2004

  Quote:
  On 2004-03-01 04:52, olivetree wrote:
  I was told that if you get a windfall, it can actually hurt your credit score to pay off a bunch of debt at once. (Geez, can anyone win at this game?)
  
  My only challenge with my score right now is my balances. I'm getting a big chunk of cash shortly. Is it better to pay down balances to a certain percentage of the credit limits, or to pay off as much as possible all at once?
  
  
  
  
  I've read that keeping your credit utilization within 30% helps your FICO quite a bit...also making sure all your tradelines include your Credit limit. Some compaines don't report your credit limit just your high balance...for that I suggest you charge up to the amount of your limit and then pay it off to about 30% or so. that will be your high balance/Credit Limit <IMG SRC="images/forum/smilies/icon_smile.gif">[ Edited by tytitan on Date 03/02/2004 ]