Paying off maxed cards all at once. Red flags?

[Anonymous]

Pay down your cards and let them report the new balance. Why not then ask for a CLI on those cards?

[SouthJamaica]

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@Anonymous wrote:

Kind of poked around but did not find any solid answers. Here is my situation:

Credit score:655 (fako)

I have two cards from Capital One

Card 1: $2200 limit, currently have $2100 used.
Card 2: $300 limit, currently have $200 used.

I have been making slightly more than the minimum payments each month, on time for about 8 months. They have both been pretty much maxed for the duration of this time.

Going to use my tax returns to pay them off completely.

Question:

Should I just simply pay both off in full? Will this scare Capital One and make them cancel/lower limits on the cards? I want to keep both cards and use them a little each month and pay them off responsibly but I don't want to scare Cap One by paying them off all at once. (I saw on another thread that this can make CC companies get nervous by having almost maxed cards for a while and then paying the off all of a sudden.)

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No problem to pay them both off completely.

[Anonymous]

Good advice here OP. 

[Anonymous]

Paying down the cards is usually a good idea. First, you save on interest. Second, your score goes up. Generally, paying down a card won't result in AA. 

Occasionally, paying down a card might result in AAs. Why? If your credit profile is worse now than when they first gave you the limit, they have no reason to reduce your limits if you are using nearly all of it. But if you pay it down to zero, they now might want to reduce your limit to keep you from using it up again. The AA here is not due to you paying down your card. It is because your credit profile is weaker in the lenders eye and when your card is maxed they don't gain anything by reducing your limit but when your card has a lot of unused limit, they can reduce risk by reducing the limit. Barclays had an article about this before. 

TLDR: Pay down the cards. Don't carry a limit. It will help your score and probably help you grow your limits. On rare occasions, paying down a card might result in AA. But the AA is not because the card was paid (it actually helps your score). The AA in these cases is because your profile is weaker and they want to reduce risk and they had little room to give you a CLD when your card was maxed. 

[Anonymous]

Of all the lenders I have seen and been with Capitalone is the nicest  one! They won't CLD you just for some number  of inquiries or number of cards you recently added from other vendors or drop in credit score!! Treat them well, pay down your balances, then they will give you good CLI too! Paying down debt never turns the red flag on, and the opposite of it does! Capitalone always like to see utlization, I mean use  the card well, then try to PIF, then you are golden with them and your credit score! Good Luck! 

[Anonymous]

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@takeshi74 wrote:

You have to always consider your sources.  A lot of people don't have a good grasp of causality.  Again, paying does not lead to AA.  It's risky factors in one's credit profile such as negative Payment History (lates, collections and other derogs), high revolving utilization, new credit accounts/credit seeking activity, etc.

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+1 +1 +1

Casuality =/= causation.  

It's not the paying off a maxxed card that causes AA, it's the behaviour that led to the maxxed out cards.

For the OP, Cap1 is really good about CLIs (they're who I started with, and a great starter card).  From experience, they won't CLI you if you pay the minimum, but will quickly forgive you.  If you've had the account(s) for at least 6 months (well, technically 3, because 6 months includes the advice I am about to give you), PIF as planned, wait three months (making at least twice the min payment if not PIF), then request a CLI.  I think you'll be pleasantly surprised.

[Anonymous]

Thanks everyone for the advice, it is much apprecitated. I have a solid plan now, will be paying both cards off completely and will be trying my best to be responsible for now on. Financially in a better spot now with new job and would like to be looking for a home in about 2 years or so once I have a solid downpayment/emergency fund established. Once again, thanks everybody for your time!!

[Creditplz]

I use capital one heavily and sometimes even go over my CL by a few dollars (5-15) and PIF or may 95% of it off every month, Capital One as far as I know is not known to balance chase you, and they don't scare at all! Just don't be late.. As for you pay those suckers off!! If you have the cash PIF and charge a bit, it'll help your scores and when the statement cuts even ask for a CLI!