About to pay off 100k in credit card debt

[Anonymous]

I will officially be at zero and plan to only use 2 credit cards going forward. How long will I have to wait for my dreadfully low score to rebound? I have no bankr or chargeoffs. I have not had a credit inquiry in 1.5 years and made one late Amex payment in 2015 and one in 2014, nothing else bad except my outstanding debt. I feel like I will pay it off and still have terrible credit forever.

[Anonymous]

Also, no mortgage or anything. Own home in full.

[azguy13]

What are your scores now and what is your overall utilization? With $100K in unsecured debt I would assume your AAoA is not too short. There are many many factors but if you are close to 100% Utilization with only 2 baddies and basically no INQs, I would assume you would shoot up pretty quickly. I would also send GW letters to Amex to try and get those baddies removed; especially if you are a longtime customer. 

[Anonymous]

I just looked at credit karma and it had me at 563 (trans) and 526 (equifax). When I look at CreditSecure through Amex it lists all 3 from 670-695. My utilization through trans on credit karma is listed at 60% but all my credit cards are maxed out and I only use my Amex platinum, pay in full each month and minimum payments on rest. I'm so embarrassed it's so bad.

[azguy13]

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@Anonymous wrote:
I just looked at credit karma and it had me at 563 (trans) and 526 (equifax). When I look at CreditSecure through Amex it lists all 3 from 670-695. My utilization through trans on credit karma is listed at 60% but all my credit cards are maxed out and I only use my Amex platinum, pay in full each month and minimum payments on rest. I'm so embarrassed it's so bad.

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I wouldn't be embarrassed as you will not e the first nor the last to have that happen. The important thing is that you pay those accounts down. If you have just about all of your cards maxed out and you intend to pay them off then I would expect a rather heavy boost in score. You really have nothing on your report other than UTL that is dragging your score down to the 500s. While I would not presume to guess an actual score, I do not see why you would not be in the high 600s at the lowest. When I had about 60% UTL and a 5 year old CO I was at close to 700 across the board. 

Don't put much stock on FAKO scores from places like CreditKarma. They are good for tracking tradelines and that is about it. 

[Anonymous]

Work with folks here who are knowledgeable about strategies for derog removal.  Goodwill letters are probably the key tactic (you can do a search on this site under that phrase) and also people who comment on forum threads may be able to hold your hand as you do that (contributor Brutal Body Shots has experience and always seems willing to do this).

I agree with AZguy that we'll be able to advise you better about what you might expect if you tell us the following:.  Prior to the 100k payoff (which sounds like it has not happened yet), tell us....

Each credit card, its credit limit, and its current balance (as they appear on your credit reports)

     * If you have a bunch of credit cards that are all $0 balance cards, you can just tell us the number of $0 balance cards and your total/combined credit limit from them... no need to list each one.

Your AAoA (average age of accounts)

Your Age of oldest account

Your three FICO 8 scores now

The exact nature of those two late payments (30-day lates?  60-day?  90-day?)

If you do not know for sure how to get all that, google Credit Check Total and sign up for their $1 free trial.

You add as a postscript:

     Also, no mortgage or anything. Own home in full.

I notice that you say "or anything."  That may mean "or any other kind of installment loan" (car loan, student loan, personal loan, finance company account, etc.).  Is that what you mean?  If so, we can suggest a great and extremely cheap way to add 30 points or so to your score.

Give us an update with the info I mention aabove and we'll be able to tell you a lot more.  The bottom line is that you are going to be fine.  Awesome that you are paying off all your CC debt.  Great idea to use a small number cards moving ahead for a while.  I'd also try to keep your reported utilization low (< 9% counting your entire combined credit limit) for the next six months and always pay your CCs in full moving ahead.

[SouthJamaica]

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@Anonymous wrote:
I will officially be at zero and plan to only use 2 credit cards going forward. How long will I have to wait for my dreadfully low score to rebound? I have no bankr or chargeoffs. I have not had a credit inquiry in 1.5 years and made one late Amex payment in 2015 and one in 2014, nothing else bad except my outstanding debt. I feel like I will pay it off and still have terrible credit forever.

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Assuming you didn't have to borrow the money, you should see a very large uptick in your score. It will be best if instead of paying all cards down to zero, you let one report with a nominal balance.

Your Vantage scores are pretty meaningless and may behave very differently than your FICO scores, so if you want to know where you really stand, you should wait a month until all your new payments are registered, and then get a 3B report from MyFICO.

[StartingOver10]

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@Anonymous wrote:
I will officially be at zero and plan to only use 2 credit cards going forward. How long will I have to wait for my dreadfully low score to rebound? I have no bankr or chargeoffs. I have not had a credit inquiry in 1.5 years and made one late Amex payment in 2015 and one in 2014, nothing else bad except my outstanding debt. I feel like I will pay it off and still have terrible credit forever.

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Once you pay down the debt, your score will rebound with the next update by the creditors showing a zero balance. As pointed out, to optimize your score, you want all to report zero except for one card to report a very small balance of 1% to 9% of that card's credit limit. 

Most of the time you will see the score update within a couple of days that the new balance is reported. 

Since you have made heavy use of your credit cards, when you pay down the revolving accounts as suggested, you will see a big rebound in your score if you haven't borrowed to funds to pay it off (like SJ mentions). 

BTW, I know if I owned a house free and clear I would consider that a good thing  Good financial behaviour trumps credit score any day. A nice balance between finances and credit score is a good thing. 

[Anonymous]

Thank you so much for replying everyone. My balance will never be zero bc i mainly use an Amex charge that reports the monthly statement.
However, I have another concern; for most of these cards, the last 7 months have been min payments, often a day or 2 late and returned payments, always maxed out. While I don't wNt to use them, I fear if the credit lines are closed then I will lose the benefit from the zero balance. Do you think the first month I should pay 75% or some other portion just in case the issuers get overly excited and think they are better off taking the $ and closing the accounts?

[Anonymous]

My financial behavior has been very irresponsible the last couple of years and while I don't think it's as bad as my credit score reflects in that I have the funds, philosophically, I agree with the score's intuition of my decision making- if that makes sense.