topic Re: How quickly does your credit score rebound after paying off credit card debt? in Rebuilding Your Credit

How quickly does your credit score rebound after paying off credit card debt?

Anonymous — Sun, 15 Nov 2009 15:26:28 GMT

Hi, first time here and you all seem very knowledgeable.

I have a question about how quickly a credit score rebounds after paying off credit card debt. I have about 15k in credit card debt across a US Bank and AmEx Blue card and approx 20k credit limit. I had good credit a year ago - mid-700s. This summer I was unable to work so only paid the minimum on both cards - AmEx dropped my credit limit to my balance. Both of course raised interest rates. Some small credit accounts also closed due to inactivity (overdraw protection at a bank, a store card). Just checked my Experian score and it is 645. I want to be able to buy a house by the end of June and am terrified that I won't be able to get a loan.

I am now working and should be able to pay off the debt by February.

I've never had a late payment. My credit history is about 10 years old and I've had a variety of loan types (car loan, student loans, credit cards). I pulled my experian credit report and there are no errors. I do have a lot of student loan debt.

If I pay off my balance by February, what is the range of increase I might see? I want to get up into the 700s.

Should I try to open a new credit account to give myself more room?

I'm also torn about which CC to pay off first. US Bank has more room between balance and limit (~50%). Normally I would pay down the AmEx because it is closer to the limit but I'm afraid that they will just lower my credit limit with each large payment. I'm even afraid of calling them because I'm afraid it will trigger some sort of review.

Thanks,

Andy

Re: How quickly does your credit score rebound after paying off credit card debt?

daisyduke — Sun, 15 Nov 2009 23:49:35 GMT

I would consider paying down whichever card has the highest interest rate.

Sounds like you don't have late payments or major derogs (like 60, 90 or 120 day late payments) so your payment history is prolly doing OK...even though you just made min payments, you still weren't late. You didn't ruin (like i did) payment history...

In my opinion, you are giving yourself plenty of time to raise your score by June of 2010...I don't know however about the score increase when you pay down your utilization.I heard ten points for about every ten percent of utilization, but i have no idea if that is correct or not. I read that on this forum. YOu may want to wait before opening up another CC account, it will probably help you with utilization however you may not want to lower your AAoA. Speaking from personal experience, I opened and just had reporting a CC card on TU, i lost 27 points for lowering my AAoA (from seven years to six)....with EQ i only lost one point b/c I think it was negated because this account HELPED with utilizaiton which was at 46% prior to that card being added, so I only lost one point with EQ.

Is your utilization 95%? if i read this correctly, then your problem is only utilization. You will want your utilization paid down anyway prior to getting a mortgage.

AMEX does a ton of soft pulls. I think they raise interest rates when a persons score is lowered. Not sure about US Bank.

I hope this helps you.

Re: How quickly does your credit score rebound after paying off credit card debt?

Anonymous — Tue, 17 Nov 2009 18:19:21 GMT

I actually have an Amex Blue card that I just paid down from 92% utilization to about 30% and I got a 30+ point increase this month because of it. The only thing tricky about Amex is they report a month behind. Meaning I paid down the card before the October statement was released, but they don't report October until November. Hope that helps a little!

Re: How quickly does your credit score rebound after paying off credit card debt?

Anonymous — Wed, 18 Nov 2009 01:55:28 GMT

Thank you both for your help. The info is reassuring. Now if I can just continue to pay down that debt. It sounds like decreasing my utilization (which was about 80% across all of my revolving credit a month ago) will raise my score enough to qualify. It's a scary thing, and a difficult time. I'm thankful for your advice. That info on Amex being a month behind is also very useful - I will make sure that it is cleared in time.

Re: How quickly does your credit score rebound after paying off credit card debt?

daisyduke — Wed, 18 Nov 2009 02:11:15 GMT

You are very welcome...Also, FYI: You can always call the creditor and find out ask them, what day of the month do you report to the bureuas? Call and do this three or four times and if you get the same answer, make payment BEFORE they report,..it's not that they are a month behind, but more of when you paid and how they updated, you can miss the window for reporting. But Andy G has some time, you are not down to the wire or anything.

I suggest calling a couple of times because you can get different answers, depending on who you talk to you. So if you get the same answer....three or four times, it's probably true. We all now each CSR prolly says something different each time, that's why i hang up and call again and ask the same question...crazy I know...

Re: How quickly does your credit score rebound after paying off credit card debt?

BungalowMo — Wed, 18 Nov 2009 12:48:55 GMT

One thing I'd like to add...if the only score you checked is Experian....get your EQ & TU scores here. EX hasn't sold FICO scores since last February. Their scores are not an indicator of where you really are. Those are FAKO's.

I get mine here & assume that EX (since I have no idea what it is) is my lowest score. If it turns out that EX is higher...that's just icing on the cake.

Re: How quickly does your credit score rebound after paying off credit card debt?

Anonymous — Wed, 18 Nov 2009 20:02:10 GMT

If you really are considering paying down your Amex card here's a link to the thread that helped me figure out when my payoffs would reflect on my reports (scroll down a few and there's an explanation from a moderator that explains it better than I probably can myself!)

http://ficoforums.myfico.com/fico/board/message?board.id=creditcard&message.id=143858&query.id=8589#M143858

Good luck!