What happens when you pay off your credit card debt ?

Question

Does your credit score start dropping, become stable or increase.

I mean after paying them off, you don't use your credit for a while.

Answer 1

It depends on what was going on before. If you never had a late payment or missed a payment, paying it off won't change it much in and of itself, especially if you had small balances. If you had large balances, your score gradually rises as you pay it down even before you pay it off, because the reduced balances mean that you have more credit available to you.

If you've had a bad credit history, then paying off your cards will mean that the score will eventually stabilize and start to rise. This takes awhile though; you're building a history that shows you can handle credit, so it will take time to create a track record.

Answer 2

There are some good resources that "divine" how the credit bureaus calculate their scores. The bureaus won't publish the equations, because they don't want people manipulating their credit. One such place is the Motley Fool (www.fool.com). These guys will have some of the best credit and investing advice out there, and it's going to be geared for the general public, not to the investing elite.

If I remember right, your credit score is determined by the age of your credit accounts, your payment history, and the quality of credit being issued. Other more minor factors are also involved. When being evaluated by a bank or lending company, however, they also take into account unused credit to see if you could go and grab a bunch of new debt right after they make a loan to you. So, having paid down cards (a lot of them) will also play into credit decisions.

Go see what the Motley Fool has to say about this, they'll give you a very well rounded answer.

Answer 3

Your credit score eventually will improve. A better way to make sure it does is to use the credit cards and pay them each month before the due date to avoid interest payments. It does help a lot.

Answer 4

This will only increase you credit score. as long as you did not have to many lates or over credits. keep the cards open and just use them occasionally and pay them off as soon as possible again.

Answer 5

Eventually your credit score will stabilize and begin to rebound. This is all assuming of course that you don't let this happen again.

Answer 6

Absolute Freedom !!

Answer 7

when you pay them off, the little man behind the curtain comes out...

Answer 8

it is know as stail credit.

you have to use your credit and make payments to
keep it active

Answer 9

Time to go shopping