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maxed out credit cards

TMS1
Member

maxed out credit cards

If I pay off my maxed out credit cards- 3 bank and 15 store cards (total of 13,500- not one late payment but average age on all is 2 years)

will my credit score increase quickly, dramatically? I was going to leave one bank card with less than 8% balance

Thanks in advance,

Tina

5 REPLIES 5
TMS1
Member

Re: maxed out credit cards

I am asking this question because I am looking to apply for a mortgage in 3 months. Its not clear how fast paying the cards off will have an impact? Thanks again

Message 2 of 6
RobertEG
Legendary Contributor

Re: maxed out credit cards

Provided that the credit limit is not adjusted by the creditor.

 

However, a big peril in letting an account be at or near its CL is that it might trigger the creditor to consider decreasing your credit limit, and thus prevent high risk should you continue or repeat that pattern.

That is particularly true if the account has remained at or near max for an extended period.

It is often difficult to predict what will or will not trigger potential credit limit decreases, but keeping util high for an extended period is likely a trigger for many creditors.

 

If the creditor decides to reduce your credit limit as you pay down the debt, then your % util will remain high even though you are reducing the balance.  That will result in not recovering the scoring impact once you pay down the balance.

 

Message 3 of 6
TMS1
Member

Re: maxed out credit cards

Thanks for the reply.

What you described has already happened with my store cards. The credit limit was lowered on each card within the past three months. 

Some of them are now reporting over the limit because of this. My score barely budges from the 590/600 range.

I have one 30 day late on my car payment from two years ago but never a late on all these cards. The average age of credit is 2.9 years-

My plan is to pay them all off in full next month except leaving a small balance on one of the bank cards. I am hoping this increases my score dramatically. I have worked hard to keep up making all my payments on time with all of the mess I created with my ignorance.

I have 3 small collections from over 5 years ago that I am looking to try and Pay in full for delete.

Thanks again.

Message 4 of 6
ImTheDevil
Community Leader
Super Contributor

Re: maxed out credit cards

Yes, even if they balance-chase you further, as long as your accounts remain open, you’ll see a significant score jump. If you are balance-chased by them, that score boost will be attenuated to an extent due to the lower overall aggregate LOC you have, but you’ll cross 5 scoring thresholds on all cards, and six on each one you pay off. I would anticipate a large jump (50pts give or take, possibly more) from doing this.


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Message 5 of 6
CramEiko
Established Contributor

Re: maxed out credit cards


@TMS1 wrote:

I am asking this question because I am looking to apply for a mortgage in 3 months. Its not clear how fast paying the cards off will have an impact? Thanks again


From what I've learned so far is that the mortgage companies may not like that much money being used to pay off your debts in that short of time. They will be looking over your financials, DTI and asking about things within the past 12 months. I could be wrong. I'm sure you'll have the right person responding about this.

 

Good Luck!





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