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PIF or gradually pay off to maximize increase in score?

Established Contributor

PIF or gradually pay off to maximize increase in score?

hi everyone. i want to know what would be the best way to bump up my credit score when it comes to paying off cc? i have the funds to pay off total balance of about $7k between all my cards. in fact i just recently paid in full 3 out of the 7 cards i have...leaving a total balance of about 4.5k left to pay off. would i get a bigger score jump if i pay all of it this week?...or will i get a bigger jump if i gradually pay off a couple of cards every 2 or 3 weeks? or will the score change be the same either way? 

11 REPLIES
Frequent Contributor

Re: PIF or gradually pay off to maximize increase in score?

Yes it will. But it will look better to the creditors if you keep using the cards and PIF each month.

 

 

I carried a balance on my Home Depot Card for two month's when I paid it off $21.00 my Ex Score went up 45 points! Smiley Surprised

CL $317,649
Senior Contributor

Re: PIF or gradually pay off to maximize increase in score?

The score change will be the same no matter which way you go about it.  Your score is based on the information that is currently on your report, there is no memory to it.  You could even max out all of your cards and then pay them back down and it would still be the same.


Starting Score: ~500 (12/01/2008)
Current Score: EQ 681 (04/05/13); TU 98 728 (01/06/12), TU 08? 760 (provided by Barclay 1/2/14), TU 04 728 (lender pull 01/12/12); EX 742 (lender pull 01/12/12)
Goal Score: 720


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Blogger

Re: PIF or gradually pay off to maximize increase in score?

Paying everything you have right away will give you the highest score since it will maximize the effective total payment thanks to lower balances accumulating interest.

To build credit, you do not have to carry a balance. The link in my signature points to my blog post on this very common misconception Smiley Happy

Senior Contributor

Re: PIF or gradually pay off to maximize increase in score?


HiLine wrote:

Paying everything you have right away will give you the highest score since it will maximize the effective total payment thanks to lower balances accumulating interest.

To build credit, you do not have to carry a balance. The link in my signature points to my blog post on this very common misconception Smiley Happy


Yes, if you are talking about having a fixed sum of money, then paying it right away would result in lower interest, so more of the money being applied to principal, thus lower overall utilization, thus higher score. 

I think the thrust of the OP's question was given a certain target utilization, does it matter scorewise how you get there.  The answer to that is no.  You don't earn more points for consistently having good utilization.  Your score is calculated for each individual report.  The only thing that matters is what is on that report.


Starting Score: ~500 (12/01/2008)
Current Score: EQ 681 (04/05/13); TU 98 728 (01/06/12), TU 08? 760 (provided by Barclay 1/2/14), TU 04 728 (lender pull 01/12/12); EX 742 (lender pull 01/12/12)
Goal Score: 720


Take the FICO Fitness Challenge
Frequent Contributor

Re: PIF or gradually pay off to maximize increase in score?

That is quite a useful bit of knowledge.

 

FICO EX 827, 2015 Feb; FICO EQ 836/900 (Citi), 2014 Dec; FICO TU08 818, 2015 Feb.

BofA Cash Rwrds Sig V 2013 10k; Fidelity Rewards AmEx /BofA 2013 15.4k; Chase Freedom Sig V 2002 24.1k; Chase Amazon Rwrds Sig V 2011 8k; Sam's Club MC 2002 10k; Dscvr It 2012 10k; Citi Dvdnd Plat Sel V 2013 8.9k; PenFed Plat Rwrds V 2013 20k; AmEx Blue Sky 2013 11.3k; AmEx BCP 2014 24.1k; Priceline Rwrds Sig V 2013 8.7k; PayPal Xtras GE Cap Plat MC 2012 5k

Established Contributor

Re: PIF or gradually pay off to maximize increase in score?

These are all good stuff! Yeah Walt you are correct about what i was trying to ask. So its pay off the rest of my cc tomorrow morning! Now ive always read when using cc, pif before the statement cut date so no interest paid and will report at zero balance still. If this is the case..will the amount i paid still be reported to the crb's? Meaning if i charged 300 on my card the 1st of July...statement cut date is oh lets say 15th of each month...i pay the 300 on the 12th and posts by the 14th. Cc will report zero balance for that month...but will it also indicate my payment amount oof 300 to the cr for that month?

Regular Contributor

Re: PIF or gradually pay off to maximize increase in score?

When I paid my cards off my score increased after that I requested CLI on the cards.  

FICO scores:EQ- 723 (6/13), TU- 722 (6/13), EX- ?
My Wallet- AMEX BCE-17.5K, Chase Freedom-6k, Cap1- 5K, BMO Harris-5K, Wells Fargo-2K,
Store Cards-Lowes- 8K, Ashley Furniture-6K, American Furniture-2.5K,


Valued Contributor

Re: PIF or gradually pay off to maximize increase in score?


Walt_K wrote:

The score change will be the same no matter which way you go about it.  Your score is based on the information that is currently on your report, there is no memory to it.  You could even max out all of your cards and then pay them back down and it would still be the same.


+1...this answer is the best one!

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Established Contributor

Re: PIF or gradually pay off to maximize increase in score?

well i did it...all 7-8 cc i have that had been floating around 60%-85% util has been paid off!...including the my personal loan balance of 5.5k from those blood suckers One Main. so in the past 2 weeks ive paid off a total of about $12k of my debts. the only thing left is my personal loan from Alliant CU which is just under 4k. so im practically at a clean slate when it comes to my cc's. ive decided that i will only use my alliant visa and discover miles cards as my 2 main monthly cards to pay bills with and pif each month. the other ones will be put away and used for emergencies. at this point...whether my fico scores get a big jump or not...its not as important as being able to breathe a lot easier because im almost debt free! woohoo!!!!