@Anonymous wrote:
I paid off my car in December and got a score watch that my fico dropped from 574 to 549. Is this typical? Logic tells me that when you pay off a loan the fico would benefit??? The loan was not paid off early, I made the last payment on the maturity date...
I would sincerly appreciate some advise on how to keep the the score going up. I've obviously never managed my credit (until recently) as my score reflects. I don't have any collections (paid both this year), I have two new credit cards unsecured (FP & HSBC) and one other auto loan....
Typically paying off installment loans doesn't help your score because installment utilization is such a small part of scoring but on the bright side you have one less debt to worry about and I congratulate you on that.
I suspect it's the 2 new credit cards that caused your score to drop but it's hard to say. Often what is left on your reports after something is paid off is more crucial to your score than the pay off itself.
A few things you can do to help your score:
1. Try and get those paid collections removed early with GW (GoodWill) letters. Even though they are paid that doesn't help your score and these will remain on your reports for up to 7.5 years from the DoFD (Date of FIrst Delinquency) on the OC account that led to the collection. I would do a search here onsite for the names of those creditors and see how other people have approached this what types of results they achieved. Are these the only derogatories you have? Any and all derogatories need to be addressed. IMO this should be your #1 priority.
2. Make sure from this point forward that you never, ever miss another payment on any type of debt. Payment history is 35% of your total score and is the most important factor.
3. Revolving utilization is 30% of your score. Both overall and individual card utilization is looked at. For maximum tweaking of your score try this strategy. It seems to work well for many people. You can use both of your cards as much as you like but have only one of your cards report a small (<9% of the credit limit) balance each month on it's statement and then always pay in full to avoid finance charges.
On your other card always have it report a zero balance on it's statement. As I said before you can use it as much as you want during the month but just time any payments so that the desired zero balance is achieved several days before the statement posts.
Hopefully some of this will help you. You'll get different advice and suggestions. Take all of it in and decide what you think will work best for you.
From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774
"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".
Starting Score: EQ 583 TU04 619 EX 592 (lender pull) 2010