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Tomorrow I Can Pay Off All My Debt of $130,000 - Help Me Do It Right Please

Valued Contributor

Re: Tomorrow I Can Pay Off All My Debt of $130,000 - Help Me Do It Right Please


Treasurecredit wrote:

I've read that paying off big debt in lump sum can sometimes lower your score, I think it's called a windfall. I would care less if I lost a few points, however,  as long as I was debt free.


Current scoring models care only about today, e.g. which open and closed accounts are present today, which baddies are present today, today's card utilization, today's loan utilization, etc. They don't care about yesterday or tomorrow.

Message 11 of 25
Community Leader
Senior Contributor

Re: Tomorrow I Can Pay Off All My Debt of $130,000 - Help Me Do It Right Please

Your idea of paying off all your credit card debt is great (and then using cards as needed but never carrying balances month to month again).

 

Also great idea is to pay the loan way down.  Talk to the lender and ask them if paying off a huge chunk of the loan will cause the next Payment Due Date to be pushed way into the future.  If so, pay it down to $100 or whatever and you are set. 

 

If not, that means they will force you to continue making monthly payments even after you pay it down.  In that event pay it down to a balance of four payments and then explore the Alliant SSL technique.  Do not take steps toward opening an account with Alliant, however, until your credit reports reflect the paid off CC debt.

Message 12 of 25
New Member

Re: Tomorrow I Can Pay Off All My Debt of $130,000 - Help Me Do It Right Please

Thanks again everyone. I am going to pay off all the CC. They won't show zero balance almost right away, because I use them. I just won't carry a balance. I also have another Chase card ($20k limit) that I use for day to day purchases, a few thousand a month, which I never carry a balance on. That card is at $1700 now. So I won't be zero's across the board.

 

On the installment loan, I think I'll pay it down to <$1,000, then call to see if they will improve the payment terms. Thanks for alerting me to keep it!

Message 13 of 25
Super Contributor

Re: Tomorrow I Can Pay Off All My Debt of $130,000 - Help Me Do It Right Please


benjaminnyc wrote:

 

On the installment loan, I think I'll pay it down to <$1,000, then call to see if they will improve the payment terms. Thanks for alerting me to keep it!


You could just PIF and then the terms would be OBE.

FICO score should never trump being debt free.  As others have said it's easy to have a small balance report.

Youre goal now is to let your accounts age and not accumulate debt.  

 

12/08/2017 FICO: EQ 843 TU 849 EX 844
Message 14 of 25
New Member

Re: Tomorrow I Can Pay Off All My Debt of $130,000 - Help Me Do It Right Please

PIF = Pay in full? I think I got that one.

OBE? Not sure I understand, because if I "PIF" the loan will go away, no?

Message 15 of 25
Valued Contributor

Re: Tomorrow I Can Pay Off All My Debt of $130,000 - Help Me Do It Right Please

I don't know what OBE is either. Smiley Happy

 

PIF (paying in full) on a credit card means to pay the full statement balance (the balance printed on the statement).You always want to do at least that much to avoid interest.

 

Paying to zero on a card means to bring your current balance to zero. If you do that before the statement cuts, the card company will report a zero balance to the bureaus. Your cards all report the statement balance on the statement date. In addition, Chase reports zero whenever you pay to zero. I've seen them report zero three times in the same statement period. Smiley Happy

 

A handful of cards (none of yours) report something other than the statement balance. For instance, US Bank reports whatever your balance is on the first of the month.

Message 16 of 25
Established Contributor

Re: Tomorrow I Can Pay Off All My Debt of $130,000 - Help Me Do It Right Please

Your scores are the least of your worries. After you clear everything, you'll eventually charge something on a card that reports on a statement and everything will be back to good.

 

What you should worry about is ensuring you have fixed the behavior that got you in debt to begin with. Don't let those cards go anywhere near maxing out again, and don't spend more than you can afford to pay off each month.

Message 17 of 25
Super Contributor

Re: Tomorrow I Can Pay Off All My Debt of $130,000 - Help Me Do It Right Please


benjaminnyc wrote:

I am lucky, and tomorrow I can pay off all my debt. I was just going to pay it all off, but then I started Googling, and it seems that may not be the best for my score! I want a high score, because I want to buy a home soon (in NYC yikes!).

 

Do you guys think you can help?

 

Here is my profile:

FICO Score: 716 (was 742 one month ago, but debt has increased since)

1 late payment 52 months ago

0 public records

0 collection accounts

Stated debt levels:

Credit Debt $105,511.00

Total Credit $74,700.00

 

These figures are not quite right, and I think they may be confounded by American Express. I have about $130k of debt:

 

Amex Platinum charge card (due November 7): $80k (not behind ever but over spend limit, only $66k is due 11/7)

Chase CC: $13k (revolving CC, 20+% rate, horrible)

Citi CC: $19k (this was a 0% promo that I maximized)

Best Buy CC: $3k (all under 0% promos)

Amazon CC: $3k (all under 0% promos, one due soon for half of the balance)

Lenders Club loan: $9k (that's what's left, payed on time everytime, about 5%, I think, started at $14k)

 

So that totals $127k. I'm getting more than that amount tomorrow to pay off all this crud. I was just going to ZERO it, but now I'm concerned I'll hurt my credit, which seems crazy. None of this credit will GO AWAY if I pay it off. It's not like closing a mortcage or car loan (except Lending Club, which is small).

 

What do I do? I am so appreciative of any help!!!

 

Thanks,

BJNYC

 

 


Amex platinum -- pay it down to zero

 

Chase -- pay it down to $50 balance, let $50 report in statement, then pay off balance to zero

 

Citi, Best Buy, Amazon, pay down to zero

 

Lenders Club - pay it down to $700, try to maintain tiny balance as long as possible until you have to pay it off

FICO8 EQ 721 TU 772 EX 769 Total revolving credit 500k
Message 18 of 25
Super Contributor

Re: Tomorrow I Can Pay Off All My Debt of $130,000 - Help Me Do It Right Please

OBE (Military/Gov community) Overcome By Events -  doesn't matter anymore/not important

12/08/2017 FICO: EQ 843 TU 849 EX 844
Message 19 of 25
New Member

Re: Tomorrow I Can Pay Off All My Debt of $130,000 - Help Me Do It Right Please

Thanks for everyone's help! Paid it all off today, but left 8% on the installment loan. Feels wonderful. Thanks again.

Message 20 of 25