Paying off Debt

[Proverb]

I have noticed that after I paid off my debt my score went down.  This is so frustrating. I paid off a lease loan  and others that I owed and my score went down 6 points.  Also there are items that are paid in full  and will show zero balance but the status will say the same late 90 dates etc.  Everything on my report is paid with the exception of mortgage and car which both are paid on time.  THIS IS FRUSTRATING.  You try to do the right thing and the scores keeps going down.  Anyone have any ideas.

[haulingthescoreup]

Hi, welcome to the forums! Sorry to hear about the frustrating experience. At least you've come to the right place.

After paying off all the cards, have the $0 balances reported yet? If not, that should help once they all show up as paid.

 --> If you're really trying to squeeze out every last point, you'll probably find that you'll do better to let one of them report $10, and then don't forget to go ahead and pay off the $10 before the due date. (This is really easy to forget! ) Nearly everyone does better to have one CC reporting a tiny balance than to have all reporting $0.

Are you using myFICO score reports? (Equifax and TransUnion only; Experian won't let consumers buy our own EX FICO score any more.) If they're not FICO scores, they might not reflect all your good work properly. If you are using myFICO reports, look on screen two of each report, on the left. What are the negatives on each, listed in order?

If there is anything that you can improve on the negatives list, that will help, because these are the factors (in order) that are most holding down your scores. If you're willing to list them here, we might be able to give you some suggestions.

[Proverb]

Thanks for responding back so fast.  I do not have any CCs.  What is showing on my Equifax is Nissan 0 balance status 90 days past due. Verizon 0 balance status 120 days past due.  Sallie Mae 0 balance 120 past due and Revolving signature line of credit acct of $500.00 that will be paid before the month is over.  Thanks

[MarineVietVet]

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@Proverb wrote:

I have noticed that after I paid off my debt my score went down.  This is so frustrating. I paid off a lease loan  and others that I owed and my score went down 6 points.  Also there are items that are paid in full  and will show zero balance but the status will say the same late 90 dates etc.  Everything on my report is paid with the exception of mortgage and car which both are paid on time.  THIS IS FRUSTRATING.  You try to do the right thing and the scores keeps going down.  Anyone have any ideas.

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Welcome.

It's always a good thing to pay down and/pay off debt but any negatives in your file: late payments, charge offs, collections, etc. will not automatically be removed when the balance is paid. As hauling said if you don't mind listing what derogatories you have you will get advice and suggestions as to what to do next.

Also when is the last time you pulled the free credit reports you can get once a year from each of the CRA's at annualcreditreport.com? If you haven't looked at your reports in awhile it would be a good idea to do so. Look at them carefully for any inaccuracies. There are ways to remove those also.

You will find this site is an invaluable source of information. I hope you stick around and participate.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

[haulingthescoreup]

Wow, then you're about to get hurt even worse, because your revolving line of credit reports as "revolving", rather than installment, and that's your only open revolving credit.

Revolving credit is a huge driver of FICO scores. This is because FICO scores measure (or try to, lol) the risk to the lender that the consumer might default. More people default on CC debt than on a car loan, for instance, because they don't want to look out their front window and see their car being pulled away by the tow truck driver. So having several open CC's with healthy history helps a lot.

Once pay off your LOC, you will have no revolving credit and 3 serious lates (serious late = 60 days within two years, or 90, 120, 150, charge-off, outside collection of any age), your scores will suffer.

I'm not one of those who advocate getting new credit to please the FICO scoring gods, but I think that you'd do well to get in with a local credit union (or maybe a genuinely local bank, as in not a local branch of a big boy bank) that offers secured credit cards and getting one. Another option would be Public Bank, which I've read is a decent rebuilding bank. You might have fees out the wazoo in your situation, so only open one. Use it for a tank of gas once a month and pay it off in full immediately. Do this for six months, and your credit profile should improve, because you will be showing that although you had problems in the past, you are able to handle it now.

OK, it just dawned on me: if this is truly a revolving line of credit, it should remain open and available, even though you pay off the current balance. If it remains open, you might save up a hundred bucks or so, and then hit the LOC for that amount of money. Pay it back promptly (no point in paying interest.) That will help maintain that revolving presence on your reports.

But most people find that their scores do best with 3 CC's (or 2 CC's and a LOC, for instance), plus some sort of installment credit, so you might need to think about gradually adding more open revolving credit. Again, a CU is great, especially if they offer auto loans as well, because then you'll have an in with an auto loan source.

eta: whoops, MVV out-typed me!

[MarineVietVet]

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@Proverb wrote:

Thanks for responding back so fast.  I do not have any CCs.  What is showing on my Equifax is Nissan 0 balance status 90 days past due. Verizon 0 balance status 120 days past due.  Sallie Mae 0 balance 120 past due and Revolving signature line of credit acct of $500.00 that will be paid before the month is over.  Thanks

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May I ask when these lates happened? Time is a good friend as far as mitigating the damage to a score because of any negative but 90 and especially 120 day lates are real score killers and remain so for a long time.

Unless you get them removed early by the creditors (which is successfully done by lots of folks) the lates will remain for 7 years from each individual date of delinquency.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

[Proverb]

How can I get them removed?  Like a said it paid off but it the STATUS says 90 days or 120 days past due.

[MarineVietVet]

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@Proverb wrote:

How can I get them removed?  Like a said it paid off but it the STATUS says 90 days or 120 days past due.

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You can write what are called GW (good will) letters to creditors asking that they remove these lates before the end of the CRTP (Credit Reporting Time Period). They are under no legal obligation to do so but it does happen. Some companies are much harder to deal with than others and there are no guarantees it will ever work but it's worth a shot.

If you do a search here on site for "GW letters" or perhaps "GW examples" you'll get an idea what other people have used and what creditors might be easiest to approach.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

[MarineVietVet]

So the lates are the only negatives you have? No charge offs, collectiions, judgements, tax liens, etc?

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

[RobertEG]

Prior reported 30/60/90/120+ day lates are not really current account status codes.They are past codes that have been retained in separate part of your crdit file.

They are  entered into your payment history profile, and next month reporting adds on to prior month's reporting, in a long string of "codes."

CRAs use the individual payment history dates for eadh prior derog to determine their 7-year drop off from further credit reporting.

So you build a payment hstory profile that records current and many prior months.

Account status codes, on the other hand,  report only the current monthly account status for the month of reporting. Next month's code overrides last month's status code.

So it is quite typcal to, for example, have a current account status code of paid, good-standing, or paid/closed, and yet also have prior derogs still showing in your CR.

GW letters should be directed to each indiv prior derog in your credit history profile, and not simply to update current account status.