Raising credit score

[Anonymous]

I will be paying of two high CC's and a personal loan within the next 30 days.  I want to increase my score as much as possible.  Would it make a difference if I pay them all off at the same time or pay them one at a time?

[Junejer]

Hi Lynn, welcome to the forum. Please read Credit Scoring 101 (at least the first post there). You might want to read up on the abbreviations used here as well.

Anyway, paying it all down at once will cause it to hit quicker. All things being equal, the scores will come out the same in the end.

Hint: Allow one CC to report a small balance 1-9% uti.

What else do you have on your CRs? Good and bad.

[RobertEG]

Is this the only installment loan that you have?  If so, it may  hurt your credit mix to pay it off.  You gain very little in reducing an installment loan that already has relatively low util down to zero, and you lose its postive affect  in the credit mix category.  You might want to concentrate on the CCs first, and let the install loan payoff continue in its normal course.  Just something to ponder.

[Anonymous]

Robert is correct. FICO scoring is largely insensitive to the balances on installment loans, but highly sensitive to revolving credit card balances. So focus on getting your CCs below 10% of their credit limits before worrying about paying off the installment loan.*


* unless you are getting slaughtered by nosebleed-level interest rates on your installment loan, whereas your CCs are interest-free or very low interest. If you're paying a $12,000 loan at 26.9%, and one of your CCs is no-interest until September and the other has you at 8.9%, then improving FICO scoring might not be your highest financial priority.

Message Edited by TheNewWorldMan on 04-01-2008 10:20 PM

[tonsers]

I agree with the other posters. Paying off the CC debt can make a big difference in your score. Don't be in a rush, though, to pay off your loans. If you leave a little bit out there, it will help your score. Just before I found these boards - I thought that making the final payment on my car loan would do wonders for my score - I dropped 10 points immediately!

[Anonymous]

Thanks ByrdMan and everyone else for your feedback.  I will check out Credit Scoring 101 today.

I also have my mortgage, car loan and student loans.  All my accounts are paid on time.  I have no derogatory accounts on my report.  I just have a lot of debt, which is killing my score.  I know the credit cards are the main culprit because my balances are high.  I'm just trying to pay down as much as I can.