Came into some money...now what?

[turninganewleaf]

I recently received a significant severence check from my previous employer.  As soon as it cleared my bank, I fully paid off my car loan (2 years early at about $6200) and paid off all 6 of my credit cards (also about $6200) and put the remainder in a money market for my 6 mos reserves as "they" suggest having.

Now what?  Is it best to keep those cards open and rotate each with a small purchase and pay off quickly in order to keep the cards open?  All of my accounts are in excellent standing.  Will the sudden payoff reflect negatively?  I'm not looking to apply for any credit anytime soon.  I have a mortgage and my car is only 3 1/2 years old.

I will say, I'm anxious to see my credit score jump with 0% utilization (w/ $8500 CL total) and car loan fully paid.  Hoping to join the 700 club!  A month ago, I was 667 (EQ or EXP?) and 695 TU (FICO). 

[Anonymous]

Is it best to keep those cards open and rotate each with a small purchase and pay off quickly in order to keep the cards open?

Yes, new fees are already in the works.

Read here.

Si vis pacem, para bellum.

An "account inactivity fee" is one I've heard discussed. If you don't use it, they charge you.

Will the sudden payoff reflect negatively? I'm not looking to apply for any credit anytime soon. I have a mortgage and my car is only 3 1/2 years old.

The don't sweat any sudden drops or rises. Motion rocks a boat, but the water soon calms.

[Anonymous]

Wow!  Congrats turning!  That's got to feel darn good.

Remember to have one card report a small balance each month (1-9%) rather than all reporting 0.

Everyone varies on this, but I just got a 12 point hit on TU for all 0 balances on CC's.

[MarineVietVet]

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@Anonymous wrote:

Wow!  Congrats turning!  That's got to feel darn good.

Remember to have one card report a small balance each month (1-9%) rather than all reporting 0.

Everyone varies on this, but I just got a 12 point hit on TU for all 0 balances on CC's.

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I agree. You might also play around with this approach to see how it works for you from month to month:

Total revolving utilization > 0 and < 9%, the lower the better, and
Reporting a balance on less than half of your revolving TL's, and
Reporting a balance on half or less of all TL's.

From a BK years ago to:
7/09 TU-742 EQ- 779
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802

You can do the same thing with hard work

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[cc29]

That's wonderful!  I'm very happy for you.

[AndySoCal]

What you have done will help your score. I would continue to use your card as needed. I would suggest at least 2 to 3 times a year. If you charge something allow the balance to report then pay it in full. I do it that way because I hate to pay interest.  Keep you cards in good standing and allow the AAOA continue to grow.

[Jazzzy]

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@Anonymous wrote:
Is it best to keep those cards open and rotate each with a small purchase and pay off quickly in order to keep the cards open?

Yes, new fees are already in the works.

Read here.

Si vis pacem, para bellum.

An "account inactivity fee" is one I've heard discussed. If you don't use it, they charge you.

Will the sudden payoff reflect negatively? I'm not looking to apply for any credit anytime soon. I have a mortgage and my car is only 3 1/2 years old.

The don't sweat any sudden drops or rises. Motion rocks a boat, but the water soon calms.

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My opinion differs a bit on this...I've read many stories here of people getting adverse action from their credit card companies for sudden rises in utilization. A FICO score is a snapshot of the moment. It doesn't have a memory. If a rise in utilization lowers your scores...which it will...that alerts your creditors to a potential risk. We've read from folks here that a large balance on one card was enough for other cards to take action. Universal default has been made tougher by the new law, but creditors can still close your cards any time you want.

I agree that a sudden drop doesn't hurt...in fact, it will help your scores. The sudden rise is a different story.

[Anonymous]

LynetteM,

I'm not really sure we're disagreeing on anything.