Credit Card Payoff Effect on FICO Score?

[Anonymous]

Greetings!

I currently have $6K on a bank mastercard. I filed for bankruptcy in 2005 and have just begun to repair my credit. This is my final credit card debt. I received a yearly bonus thru my work and have enough to pay off the card in full.

When I explain this situation to other people who have researched their credit actions related to their FICO score they report different effects.

My question. Does paying this card of in full at one time adversely effect my credit score? OR is it better, thru the eyes of FICO, to pay the card off over the course of several months?

Any feedback would be greatly appreciated!

Thanks,

Dazbog

[fused]

Welcome to forums!

Its best to pay it off as quickly as possible. So, in your case, a one time pay off is best. Do you have other credit cards? If so, what are their credit limits and balances?

[Anonymous]

Thank you Fused!!

At this point in time this is my only credit card with a balance.

I have two gas cards which were paid off last month.

I had an Amex card which was cancelled via personal letter last month due to low payment amounts vs. actual debt owed. The balance left on that card is $340 and will be paid off this week.

I do not know my FICO score at this time. I just read I can view it for free on my WAMU/Chase credit card account (the card in question) but the website is not operable until the 9th due to the buy-out of WAMU by Chase.

Dazbog

[Anonymous]

Just chiming in one point:  If you pay your balances all to ZERO, this may not help your score as much as possible.

I recommend keeping $50 or some small amount on 1 or 2 cards.  While high utilization hurts, so does no utilization.  I recently had paid all cards and revolving credit to zero.  My score dropped 11 points.  I put $50 on 2 cards and it increased 14 points.

FICO is more than risk analysis for the lender.  It also is profit analysis.  If you don't use your cards, why grant credit?  So for max FICO regarding revolving credit utilization, I recommend:

1.  Keep any balances to 2 cards max (rotate so that you have useage on all cards periodically)

2.  Keep utilization to 7% or less.

3.  Do not have zero utilization.

4.  Do not apply for new credit (no new inq) if possible

Also, the percentage of utilization is only one parameter.  For example, those people with large amounts of available revolving credit can be at or below 7% and still be getting dinged.  Not only does percentage of utilization count, but so does actual dollar balances.

[Anonymous]

Thank you txjohn!

I will try your approach as it does make sense.

Regards!