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New Member
Dlbel
Posts: 2
Registered: ‎11-10-2011

Pay off debt and Fico impact question

[ Edited ]
Question: In what way would paying off debt best impact fico scores?
Situation: score eq is 696.
I have total of 5 cc all in debt management program. On credit report it shows 3 of the 5 closed accounts with balances which are half the cl. The remaining 2 show as open with balances which are half the cl.
Ready to pay all off through debt management company. Need fast impact to get Fico above 700.

What would be the best option?
Pay it all off, then ask for a rescore? Afraid that this may drop my score. Paying it all off may show no credit cards.
Pay off closed accounts and pay way down the open ones under debt management?

Thanks.
Valued Contributor
ptr2593
Posts: 1,486
Registered: ‎08-14-2011

Re: Pay off debt and Fico impact question


Dlbel wrote:
Question: In what way would paying off debt best impact fico scores?
Situation: score eq is 696.
I have total of 5 cc all in debt management program. On credit report it shows 3 of the 5 closed accounts with balances which are half the cl. The remaining 2 show as open with balances which are half the cl.
Ready to pay all off through debt management company. Need fast impact to get Fico above 700.

What would be the best option?
Pay it all off, then ask for a rescore? Afraid that this may drop my score. Paying it all off may show no credit cards.
Pay off closed accounts and pay way down the open ones under debt management?

Thanks.

 

Do not pay on the ones that are reporting as closed.  Paying those will do absolutely nothing for you.  Try to get a PFD (pay for delete).

 

Do pay the two that are open.  You won't need to request a rescore because your score will automatically go up as those get paid due to your %utilization decreasing.

 

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Moderator
LIGHTNIN
Posts: 4,047
Registered: ‎03-24-2008

Re: Pay off debt and Fico impact question

Paying it all off, will not erase those CC from your CR.

 

Is one of the three closed CC's, your oldest account?

If so, don't have it removed because it is helping your AAoA (average age of accounts) and your score.

 

By not paying the closed CC's, could result in the OC selling the debt to a CA.

Then, if the CA starts to report on your CR, it can really hurt your score,by 80 points or so,depends on how old the debt is.

 

Or what is even worst, if the debt is still within your states SOL(statue of limitations), the OC can go to court to try to get a judgment. That would hurt score even more, besides remaining on a CR for  seven years from the date the judgment is filed.

SOL varies state to state and has nothing to do with credit reporting. It has to do with the legal side of things. It's the time limit a creditor has to go to court and win.

 

I'm not trying to scare you, just letting you know what could happen.:smileywink: Sorry for all the questions, just trying to help the best I can.

 

Are you applying for a mortgage? Have you talked with a lender already?

Do you have any late payments reporting in the past 12months?

These closed CC's, were they just closed with balances? or are they CO's (Charge Offs)?

How long ago was there any payments made on these 3 CC's?

 

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New Member
Dlbel
Posts: 2
Registered: ‎11-10-2011

Re: Pay off debt and Fico impact question

Everything is much appreciated. Here are the more specifics.
Debt management(counciling) not collection on all my cc which were 5. All payments current for past three years and had raised fico to 730. All cc's in someway closed. 3 of them are closed/closed with balance half of cl. The other 2 show as open with balances half of cl. On the open accounts, comments are under counciling. On that it shows revolve and debt ratio ect.
Just in August, refinanced home to 4.85. 30 yr fixed. In October switched out a vehicle with a new one. My score was 720 prior to car loan. Now score is 696. The only other thing than the 5 cc in good standing where they are at is a full mortgage and full car loan.
Looking into a franchise opportunity that requires a 700+.
I can pay off all cc debt. However, when I pay the 2 that are in the open, they will then go to zero ballance but then move into the closed. After that, I will have no revolving and cc. I have 17+ year credit history that is good.
Just afraid to pay off to look good, but then have the fico drop because of something like not having revolving credit and no cc.
Any suggestion?
Thanks to anyone and everyone for their input.

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