How do I improve score by paying down credit cards

[vgm507]

I have 3 credit cards and an auto loan on my credit as of now. All others have been closed and closed with good standing(no collections, or major marks against me at all) I did have a car loan a few years back that I was late on 2 times in 66 months, but it has been paid off for some time now and shows "pays as agreed" on report. That's the only bad bad mark on it. A couple months ago my score was somewhere around 720, now it is showing 635!!!!!!!  After reading the posts on this site, I have found out that, (little did I know) using a credit card to help credit is a good idea as long as you don't Max it out!!! I thought the opposite, I thought you had to use it and then pay on time payments to get a better score. Much more to it than that... Oh well, water under the bridge, now I just want to FIX it and get it back to at least a 720 or 740 again!! I have the means of paying off all cards within a month (like I said, I thought I was suppose to use it up, then pay it back over time to establish credit ) I just need to know what is the best way to go about it to get the greatest increase in a 3 to 6 month period of time.  Some forums say pay all off at once, and some say doing that, didn't give them much of a increase in points, others say to pay most of it off and then keep paying every month  for a little while to see a big increase... Some say it depends on the day the card reports to bureau.. Please, any advice or personal experience you have similar to my issue would help me a lot.  I am new to credit cards and the whole scoring thing ,I just got my first credit card 1 1/2 years ago and before then, didn't pay much mind to my credit score, but now I REALLY want to get it back up and keep it up. I pulled my credit report the other day, this is some information that might help:

cards         balance/limit

Capitol One  $645/$750 reports to bureau on the 10th

Maurice       $0   / $150 reports to bureau on the 21st (just paid this one off , it wasnt showing paid yet when I pulled report)

Bealls          $365/ $600  reports to bureau on the 21st

would it be best to pay off the capitol one first since its a major credit card, or does it matter?  also, should I just pay them all off  at once or pay most of it off, then pay them over the next couple of months? I just want to get the largest increase in the next 3 to 6 months that I can.

thanks y'all!!!!

[guiness56]

Since your Cap 1 is sitting at 86% I would at least pay enough to get it down from maxed out so you are not dinged for that.  Your overall is 67% which is way too high.

The sooner they are paid down/off the sooner your score will go up.  Every time you pay down the balance your score will go up.

It is best to let all but one card report a 0 balance and the other at 9% or less for an optimum FICO score.  FICO has no memory of your utilization.  It is a snapshot of what is reported on the day you get a score.  Right now you are at overall 67%.  If next month you are at 10%, that is what your score will be based on.

Your score will not go up until you pay those down. 

[bluescale]

I feel like I'm posting my experience in a bunch of different threads, but if it helps people, then what the heck .

I took a trip to Italy and France in May.  During that time, I maxed out my card and line of credit (I have one of each).  A few days after I came home, I paid off both my card and LOC.  The LOC 100%, and the credit card down to about 4%.  This was based on the recommendation of people on this site.  My lenders finally reported back to the credit agencies this week.

• TU went from 690 (when maxed) to 751
• EQ went from 641 (when maxed) to 741
• EX went from 653 (when maxed) to 698.  I purchased this report early, so it's only showing my credit card paid down to 4%.  My LOC is still maxed out on the report.  I may purchase the updated report on Monday, although I'm a bit tired of throwing money at these reports, since I don't realy need them for anything right now.

I did not pay these off over time.  I went from maxed to practically paid off.  The only reason I left a small amount on one card is because people on this board explain that FICO seems to like seeing a small balance on 1 (and only 1) line of revolving credit.  From my personal experience, this seems to be true.

[vgm507]

Thank you so much for your reply.... Im glad that you you decided to post here, even though you said you have posted in other places!!!  That really put my mind at ease. I plan on paying all of them off but one. Pay all but like 5% on ONE card and the others show $0 balance to make the most of your score.  I guess just from maxing my cards out so suddenly hurt my score, I had a score of 720ish and then when I checked this past time it dropped to the mid 600's so, I was hoping it could jump back up as much as it dropped by paying the balances. Your post REALLY helped me, and I hope my score will see an increase as yours did after paying them down.  I have been working really hard to keep my score up and I suppose from not really understanding how the scoring system works, I messed up really bad by having too big of a balance on my cards. I didn't realize that that alone could have such an impact on the score. I just assumed as long as payments were made on time and pay more than min. due that that was how it worked. I have found this site REALLY educational and very helpful in understanding the fico system better and I really appreciate y'all taking the time out to respond to my post and for your help!! Thanks again!!!

[guiness56]

Utilization is one of the biggest factors in your score and something you have complete control over.   FICO has no memory of utilization so because it is high this month when it is paid down, once reported, you will be scored on that utilization.  It is a snapshot of your utilization at the time of the score.  You do not suffer months for having had high utilization once paid down.

[vgm507]

I was worried that I had worked so hard for the past year to improve my credit score, and because it went down this past month, that it would take me another year to get it back where it was... I searched the internet for more information on how to improve it, but none of the sites I found would actually answer the question of how many points could it increase or how long it could take after paying credit cards off/down.. glad I found this forum on this site... its helps talking to and hearing actual personal experiences from others. Thanks

[bluescale]

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@vgm507 wrote:

I was worried that I had worked so hard for the past year to improve my credit score, and because it went down this past month, that it would take me another year to get it back where it was... I searched the internet for more information on how to improve it, but none of the sites I found would actually answer the question of how many points could it increase or how long it could take after paying credit cards off/down.. glad I found this forum on this site... its helps talking to and hearing actual personal experiences from others. Thanks

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One thing to keep in mind is that everyone's score behaves differently.  When you pay down your cards, you will certainly see a an increase - probably a significant one - in your scores.  However, what happened with my scores may not be representative of what happens with your scores.  We could be on different scorecards, leading to different end results.

Still, where you were before you started running up your balance should be a good indication of about where you'll be after you pay it down.

[vgm507]

I do realize everyone's situation is not the same, and I may not see the same numeric increase as another, but it does help me to know that it won't take a year to see any type of increase as I had thought.  Hopefully I will know exactly how much it increases by the next couple of reports. Im paying off my cards this week, all but one, which I will keep only a max of 5% on, just to keep something with a balance to pay on each month.  I plan on checking them periodically since I now have some sort of inclination as to when each of my credit card companies report each month.  Im going to keep a close watch and update this thread  when I find out, never know, my experience may very well help another person in the future!

[Anonymous]

This post really helped me..