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Rebuilding/Boosting Score- pay down current balances or offer PFD to old collections?

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dbs8222009
Member

Rebuilding/Boosting Score- pay down current balances or offer PFD to old collections?

My FICO has been wavering in recent months due to high revolving balances on my open cards (due to Christmas) and too many inquiries (I got a little "approval" happy, unfortunately). I'm currently at around 80% utilization of my revolving accounts...I know that less than 30% is good, and less than 10% is best (thank you, myFICO forums Smiley Happy lol). I have 4 old collection accounts, all but 1 are scheduled to fall off by next fall. My most recent baddie is 4 years 10 months old, which is the one collection not scheduled to fall off next year. 

 

My question is, would it benefit me more to just pay down/off my cards and do nothing to these collection accounts (validation has been requested), OR would it be better to paydown my cards to about 50% utilization and save a little to offer PFD to these old collections? I have read through forums and blogs and everyone seems to think if you don't have the money to pay right away in a PFD situation that you will lose the deal, and I don't have enough extra money to do both.

 

I have a solid 3+ years of excellent payment history (the gap was caused by not having any reporting accounts) and I have opened new accounts in the past year and a half that have helped my recovering score tremendously. But we are trying to get a home in the next year or two so I want to improve my credit situation asap!

Also, does anyone know how long the "too many inquiries" directly affect your score?

Thanks for any help/advice/ideas, it is much appreciated!

Message 1 of 6
5 REPLIES 5
Anonymous
Not applicable

Re: Rebuilding/Boosting Score- pay down current balances or offer PFD to old collections?

Impossible to say really - Reducing balances is something that can be done at any time and it will give you the same result, all other things being equal. I'd work on the recent item first, let the others drop off, and pay down whatever I could after that.

Message 2 of 6
sparklerd34
Established Contributor

Re: Rebuilding/Boosting Score- pay down current balances or offer PFD to old collections?

I would pay your balances down when you can. If you can get them to remove them pay them but get it in writing sometimes paying them won't change your score but your balances can hurt your score and give about 5 or 6 months before you apply for a card





Message 3 of 6
gdale6
Moderator Emeritus

Re: Rebuilding/Boosting Score- pay down current balances or offer PFD to old collections?

Inquiries affect Fico score for up to 1 year. Too many inqs excuse is used by some banks even if they are past 1 year mark, typically though they are looking in 6 months timeframe, there is also too many new accounts and a lot of UWs look at your new accounts in the past year. If you are declined for inqs you can recon and explain why you have so many. If those CAs are past your states SOL I think I would just pay down your current CC balances.

Message 4 of 6
dbs8222009
Member

Re: Rebuilding/Boosting Score- pay down current balances or offer PFD to old collections?

Thank you all for your input! I will probably give it a few weeks to see if my validation letters get me anywhere, and in the meantime I will pay off my smaller balances. I appreciate the various suggestions!
Message 5 of 6
Anonymous
Not applicable

Re: Rebuilding/Boosting Score- pay down current balances or offer PFD to old collections?


@dbs8222009 wrote:

My FICO has been wavering in recent months due to high revolving balances on my open cards (due to Christmas) and too many inquiries (I got a little "approval" happy, unfortunately). I'm currently at around 80% utilization of my revolving accounts...I know that less than 30% is good, and less than 10% is best (thank you, myFICO forums Smiley Happy lol). I have 4 old collection accounts, all but 1 are scheduled to fall off by next fall. My most recent baddie is 4 years 10 months old, which is the one collection not scheduled to fall off next year. 

 

My question is, would it benefit me more to just pay down/off my cards and do nothing to these collection accounts (validation has been requested), OR would it be better to paydown my cards to about 50% utilization and save a little to offer PFD to these old collections? I have read through forums and blogs and everyone seems to think if you don't have the money to pay right away in a PFD situation that you will lose the deal, and I don't have enough extra money to do both.

 

I have a solid 3+ years of excellent payment history (the gap was caused by not having any reporting accounts) and I have opened new accounts in the past year and a half that have helped my recovering score tremendously. But we are trying to get a home in the next year or two so I want to improve my credit situation asap!

Also, does anyone know how long the "too many inquiries" directly affect your score?

Thanks for any help/advice/ideas, it is much appreciated!


The old collections...if they are scheduled to fall off in the fall, than do nothing with them.  You've gone this long, 6-8 months more will not hurt you.  

The recent collection; because it is nearly 5 years old, you have a little bit of room to work with and offer a PFD starting at 20% of the amount owed.  However, as you mentioned, you do not want to do this until after the SOL period.    Once you are beyond them suing you for a judgement, you can wheel and deal.  Note: follow the advice...get it in writing.  

 

Sounds like you do not actually need to make any purchases right off, so you  have time to work on your utilization and those baddies?

 

Good luck

Message 6 of 6
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