Estimated Impact of total payoff of credit card balances? 50% to 0% utilization.

[Anonymous]

A quick one for the credit score gurus! 

I am going to be paying of all of my credit card balances in one shot next week.

Despite never having made a late payment on any debt I was getting rate jacked on all of my cards this year. Probably based on the higher utilization and my shorter credit history (3 years or so on oldest card).

I won't be replacing the credit cards with any new debt that is going to be reporting. So 11K off the credit report... yay! I don't plan on using them again either after the great treatment they gave me this year. 

My latest score is 643, equifax with myfico score watch.

Two questions:

First, does any one have any guess about the score impact of having zero utilization? It will be a very large move, I hope it will be viewed very favorably.

Second, does any one know the time frame I am looking at from paying the credit cards off, to having the flow through the my credit reports? Should I request to the credit card companies that they send an update to the credit reporting agencies to speed up the process?

 Thanks for all the information!

Blue skies!

Doug

[pattycake]

Doug - welcome to the forums!!!!

First off, what else is on your credit file - any baddies?  

Paying off util can have a very positive impact on your score, but you do want to keep some activity on your accounts, otherwise the CCC wil close them for lack of use.  

[Anonymous]

Zero baddies. Never a late payment.

I have a auto loan that is paid per agreement that is a 13k balances, and school loans of about 50k that is paid per agreement.

My plan is to use each credit card for a very small transaction here or there and pay in full each month.

My only concern is that hopefully the credit companies don't do a jig when I pay them off in full, the way they raised my rates them must think I have financial aids, and close my accounts before my score jumps back up and they get back to reality with the way they are perceiving my credit risk. I have a sneaking suspiscion that if I had a card with a zero balance this year it would have gotten closed and I would have received a letter in the mail.

I wish my BOA cc wasn't my oldest account, I would close them so fast their heads would spin otherwise. I despise them after my experinces with them this year. Terrible company.

Message Edited by DougH on 07-23-2009 09:15 AM

Message Edited by DougH on 07-23-2009 09:19 AM

[pattycake]

What is your AAoA?  Sounds like you're still in the newbie bucket, so util might give you a boost.  I'll wait for the others to chime in here, but the CC forum seems to get more action than this one. 

Congrats on coming to these forums - I wish I had them available when I was young.  But, it's never too late! 

[JoeBJay20]

To your first question, there is no set in stone rule, but on average people tend to see about a 10 point score gain for every 10% drop in utilization.  You'll definitely see your scores rise a good bit, but how much exactly would be impossible to guess.

To your second question, it will show up the next time your cards report.  Most credit cards report to the credit bureaus on the date the statement drops, but a select few report on the last day of the month.  You can search the forums for "name of your card reporting date" to find out when your cards report.   

[RobertEG]

approx 25 pts.