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Paying off maxed cards all at once. Red flags?

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Anonymous
Not applicable

Paying off maxed cards all at once. Red flags?

Kind of poked around but did not find any solid answers. Here is my situation:

 

Credit score:655 (fako)

 

I have two cards from Capital One

Card 1: $2200 limit, currently have $2100 used.
Card 2: $300 limit, currently have $200 used.

 

I have been making slightly more than the minimum payments each month, on time for about 8 months. They have both been pretty much maxed for the duration of this time.

Going to use my tax returns to pay them off completely.

 

Question:

Should I just simply pay both off in full? Will this scare Capital One and make them cancel/lower limits on the cards? I want to keep both cards and use them a little each month and pay them off responsibly but I don't want to scare Cap One by paying them off all at once. (I saw on another thread that this can make CC companies get nervous by having almost maxed cards for a while and then paying the off all of a sudden.)

Message 1 of 18
17 REPLIES 17
Chris679
Established Contributor

Re: Paying off maxed cards all at once. Red flags?


@Anonymous wrote:

Kind of poked around but did not find any solid answers. Here is my situation:

 

Credit score:655 (fako)

 

I have two cards from Capital One

Card 1: $2200 limit, currently have $2100 used.
Card 2: $300 limit, currently have $200 used.

 

I have been making slightly more than the minimum payments each month, on time for about 8 months. They have both been pretty much maxed for the duration of this time.

Going to use my tax returns to pay them off completely.

 

Question:

Should I just simply pay both off in full? Will this scare Capital One and make them cancel/lower limits on the cards? I want to keep both cards and use them a little each month and pay them off responsibly but I don't want to scare Cap One by paying them off all at once. (I saw on another thread that this can make CC companies get nervous by having almost maxed cards for a while and then paying the off all of a sudden.)


Pay them off completely.  Having maxed out cards is a major risk factor to lenders, paying off debt is not.  Keep in mind you will most likely need to pay your full statement balance for two months in a row to get your grace period back.  Consult your cardmember agreement on this but know you will begin to accrue interest right away on all purchases until you get the grace period back. 

Message 2 of 18
Anonymous
Not applicable

Re: Paying off maxed cards all at once. Red flags?

Sounds good. Better financially now so will be keeping utilization below 10% on both cards and paying off in full each month for now on. Just wanted to make sure Cap One won't want to dump me because they would be worried about me maxing cards again.

Message 3 of 18
Chris679
Established Contributor

Re: Paying off maxed cards all at once. Red flags?

Say what you want about Capital One, heaven knows people do on this forum.  I don't think anyone has ever accused them of being easily scared.  

Message 4 of 18
Anonymous
Not applicable

Re: Paying off maxed cards all at once. Red flags?

@Chris679 😆
Message 5 of 18
Nova5041
Frequent Contributor

Re: Paying off maxed cards all at once. Red flags?

Yeah don't worry about it, and besides capital one is definitely the most laid back bank of the top banks. Lol!

BK 7 Discharged: 5/30/2018
Fico Scores after Discharge: Experian-552 TransUnion- 490 Equifax- 571
Message 6 of 18
Anonymous
Not applicable

Re: Paying off maxed cards all at once. Red flags?


@Chris679 wrote:

@Anonymous wrote:

Kind of poked around but did not find any solid answers. Here is my situation:

 

Credit score:655 (fako)

 

I have two cards from Capital One

Card 1: $2200 limit, currently have $2100 used.
Card 2: $300 limit, currently have $200 used.

 

I have been making slightly more than the minimum payments each month, on time for about 8 months. They have both been pretty much maxed for the duration of this time.

Going to use my tax returns to pay them off completely.

 

Question:

Should I just simply pay both off in full? Will this scare Capital One and make them cancel/lower limits on the cards? I want to keep both cards and use them a little each month and pay them off responsibly but I don't want to scare Cap One by paying them off all at once. (I saw on another thread that this can make CC companies get nervous by having almost maxed cards for a while and then paying the off all of a sudden.)


Pay them off completely.  Having maxed out cards is a major risk factor to lenders, paying off debt is not.  

Keep in mind you will most likely need to pay your full statement balance for two months in a row to get your grace period back.  Consult your cardmember agreement on this but know you will begin to accrue interest right away on all purchases until you get the grace period back. 


+1

Maxed out cards keep your scores down

(Many marketers have 'fooled' ppl into this mindset where the CC is gonna be mad or scared if you don't continue t let them make more % but the truth is

what keeping the balances does is cost you a better score and more OPTIONS other than your current vendor...it's like your current 'spouse' saying stay 'ugly'

so no new suitors 'see' you....pay your debt down

And for the love of all that is holy don't max out a toy limit $300 card..let that sucker stay in the sock drawer until you axed it )

 

No vendor is going to have the 'issue' with getting PAID back...never worry about that.

With Cap1 you will need 2 months of PIF to gain back the grace period so expect % charges otherwise.

Message 7 of 18
lg8302ch
Senior Contributor

Re: Paying off maxed cards all at once. Red flags?

YES to pay down/off.  Cap1 is not a lender to easily get scared and beside that if a lender does want to balance chase on an account then there is nothing you can do but wait and try to reinstate limit.  I would not expect any AA from Cap1 at all.  Once paid off I would even go as far as telling you to hit the luv-botton and see what you get there.  You mention you will keep 10% util in the future.  For optimal score results it would be best to let the small account report  with 0 balance and on the other less than 10%. You can use your cards as much as you like but pay them down before statement gets cut and let 0 balance respective less than 10% report. This will give you best score results Smiley Happy

Message 8 of 18
Anonymous
Not applicable

Re: Paying off maxed cards all at once. Red flags?

cap1 is like a lion; i haven't seen them scared yet. pay off and watch your scores rise
Message 9 of 18
takeshi74
Senior Contributor

Re: Paying off maxed cards all at once. Red flags?


@Anonymous wrote:

 

Should I just simply pay both off in full? Will this scare Capital One and make them cancel/lower limits on the cards? I want to keep both cards and use them a little each month and pay them off responsibly but I don't want to scare Cap One by paying them off all at once. (I saw on another thread that this can make CC companies get nervous by having almost maxed cards for a while and then paying the off all of a sudden.)


Paying is not what causes adverse action.  If you have high revolving utilization with maxed cards then get them down ASAP.  If a creditor is going to take adverse action on you then the creditor is going to take adverse action.  How you pay will not change that.  You can address adverse action if it happens.

 

If a creditor CLD's, balance chases or closes accounts (i.e account with a balance closes and reports in such a way that it reports at 100%) you're just extending the period of time that you are in a state with high/maxed revolving utilization.  You want to minimize that time, not prolong it, if you want to avoid adverse action.

 


@Anonymous wrote:

Kind of poked around but did not find any solid answers.


It's easy to miss the forest for the trees if your search is too specific.  Here's what matters:

 

Revovling utilization has a significant impact, falling under Amounts Owed.

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

 

Both individual and overall revolving utilization matter.  30% is a generally suggested maximum but far from ideal.  Lower is generally better as long as you don't have all revolvers reporting 0 balances.  Short term high utilization generally isn't an issue (can depend on the shape of one's credit profile and the creditor's specific risk aversion) but prologned high utililzation can lead to trouble.

 

Based on that info you should know what you need to do.  Try to understand the why versus trying to memorize every possible situation.  Given the above you need to drop your revolving utilization ASAP.

 

 


@Anonymous wrote:

Credit score:655 (fako)


Alkways consider the specific scoring model and CRA.  Also consider the relevance of a given model/CRA combo to a given creditor/product.  Do you have any creditors or intend to apply with creditors that use the score you're referring to?  Keep in mind that there isn't just one scoring model used by all creditors.  For most models you have a score with each of the 3 major CRA's.  Don't overlook the other 2 CRA's.

 

If you're maxed score is the least of your concerns as you won't be applying for anything while you're in that situation.  Avoiding AA is your top prority.  You can worry over scores when you get your revolving utilization significantly dropped.

 


@Anonymous wrote:

I I saw on another thread that this can make CC companies get nervous by having almost maxed cards for a while and then paying the off all of a sudden.


You have to always consider your sources.  A lot of people don't have a good grasp of causality.  Again, paying does not lead to AA.  It's risky factors in one's credit profile such as negative Payment History (lates, collections and other derogs), high revolving utilization, new credit accounts/credit seeking activity, etc.

Message 10 of 18
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