Paid off mortgage and 2nd mortgage charge-off. How will that effect my score?

[Anonymous]

First post here. 

I just sold my house.  My current score is 638-656 depending on the agency.  I have one late payment reported from my mortgage from about 2 years ago (oversight on my part) and no other late payments.  The only other negative is the charge off for my second mortgage.  First reported late was in 2010 and when I pull my reports it shows that account should fall off in the next month or so.  However, in selling the house, I also paid off the 2nd mortgage.  How will that report?  Will it at all, since it's about to age off?

Also, I took some of the equity and paid all my revolving accounts to under 30%.  Available credit is around $15000 and I paid every account down and now have a balance of about $3800.  

I'm just looking to see what, if any, score boost I might see from the account that was delinquent (ONLY delinquency) being paid, and wondering if it will still drop off here shortly.

Thanks!

[medicgrrl]

You should see some sort of score increase for the CO falling off.  If you want to boost your scores more, pay off all credit cards except 1.  Leave the last credit card to report a balance of less than 9%.

[Anonymous]

OK,

Is one card under 9% sort of the gold standard?  I've always though just keeping them under 30% was the best way to go.  Paying off the rest could be done tomorrow.  I've had utilization around 70% for a long time.  With the charge-off, I just didn't worry about it much.  I knew that was already killing my score.  

Let's assume I have a balance of around $1000 on $15000 in available credit, no negatives, and a 12k personal loan that is always been paid on time.  Average account age of around 6 years.  What sort of score could I expect to see?

[HeavenOhio]

Under 30% (28.9% or lower) is considered responsible borrowing.

Under 9% (8.9% or lower) total utilization with a single card reporting a small balance gets the most out of the utilization portion of your score. Make sure that single card reports at least $5. Some lenders forgive small balances and report zero.

[Anonymous]

I just want to make sure I understand.

If I have 5 credit cards, 3 store cards.  15,000 total credit.  

I should pay off all but one, and keep around $1000 on it, at all times?  Even if the limit on that card is say, $2000?  

[Revelate]

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@Anonymous wrote:

I just want to make sure I understand.

If I have 5 credit cards, 3 store cards.  15,000 total credit.  

I should pay off all but one, and keep around $1000 on it, at all times?  Even if the limit on that card is say, $2000?  

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It doesn't much matter what you leave your balances at day to day as it's only when you apply for something that it matters; for FICO optimization though pay off everything, and leave a small balance on one (like $20 in homage to ye olde yuppie foodstamp).

Anything north of 10% aggregate (or maybe 9.xx% with the way FICO appears to round things in the margins on this calculation) is a ding, but there's also metrics for individual tradeline utilization and also number of revolvers with balances.

Depending on your individual credit file and what scorecard you fall into, you may have more leeway, but one card with a minimal non-zero balance and everything else zeroed out is optimal for everyone, possible exception of those that have 2 cards or less but doesn't sound like that's the case here.

[NRB525]

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@Anonymous wrote:

First post here. 

I just sold my house.  My current score is 638-656 depending on the agency.  I have one late payment reported from my mortgage from about 2 years ago (oversight on my part) and no other late payments.  The only other negative is the charge off for my second mortgage.  First reported late was in 2010 and when I pull my reports it shows that account should fall off in the next month or so.  However, in selling the house, I also paid off the 2nd mortgage.  How will that report?  Will it at all, since it's about to age off?

Also, I took some of the equity and paid all my revolving accounts to under 30%.  Available credit is around $15000 and I paid every account down and now have a balance of about $3800.  

I'm just looking to see what, if any, score boost I might see from the account that was delinquent (ONLY delinquency) being paid, and wondering if it will still drop off here shortly.

Thanks!

---

Congrats on getting close to some good score improvements!

I'd just let the CO get resolved before doing too much to optimize the CC balances.

Can you list out the cards you have, bank or store, card name, current limit and latest statement balance? Depending on the card, there are sometimes ways to get a soft pull CLI to assist in improving utilization measures.

[HeavenOhio]

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@Anonymous wrote:

I just want to make sure I understand.

If I have 5 credit cards, 3 store cards.  15,000 total credit.  

I should pay off all but one, and keep around $1000 on it, at all times?  Even if the limit on that card is say, $2000?  

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You never want to pay interest. You should let one of your major cards report a small balance, but that balance should come from a new charge.

As stated above, you don't have to worry a lot about optimizing for scoring purposes unless you're about to apply for new credit. But you don't want balances that are high enough to spook anyone. Below 30% (28.9% or below) is considered to be responsible. But you can get away with being above that on a single card once in a while.

[Anonymous]

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@NRB525 wrote:

Congrats on getting close to some good score improvements!

I'd just let the CO get resolved before doing too much to optimize the CC balances.

Can you list out the cards you have, bank or store, card name, current limit and latest statement balance? Depending on the card, there are sometimes ways to get a soft pull CLI to assist in improving utilization measures.

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First number is credit limit.  2nd number is statement balance.

Capital One business:   $2150            $644

Capital One Mastercd:   $1500             $447

Capital One Visa:            $750               $206

Chase Visa:                   $1000              $292

Credit One Visa:             $1750             $407

Credit One Master:         $750               $19

First National CC:           $1250             $358

Merrick Bank:                 $1800               $527

Amazon:                          $1500               $417

Discount Tire:                 $1400              $341

Walmart:                        $1000                $172

Emblem Visa:              $350                   $0

[Anonymous]

Just a quick update.  I just checked over at Experian (which updates daily) and my score jumped 16 points since yesterday.  The only change on my report is that one card (the Amazon card) reported the new balance of around 30% utilization.  Could one card make that much difference???  I haven't paid for a new MyFico report, since I know nothing significant has changed.