I just paid off what I owed on my credit report. I checked it this morning and my credit score is lower? WTF??

Question

I was trying to find an apartment and they kept telling me that my credit was too bad. So i decided to get it straightened out and pay off all of my bills. When i checked my credit score this morning, it was way lower than before. Can someone help me try to raise my credit score???

Answer 1

You might want to try the FICO kit that's recommended by personal finance guru Suze Orman - http://necessaryvirtues.com/recommends/suze

Answer 2

Pay'in off old collection accounts does not help you. This in fact hurts your scores. What your doing is activating the DLA "Date of Last Activity". SO if you have an account and the last time you paid on it was 10/2003, that's your DLA.... 4 months later it's sold to a collection company. Now fast forward too today and that company has found you and wants their money. Once you pay it , you have now activated that DLA. witch is NOW Sept-2006. You just brought a negative account to a current date, Witch current accounts make up 15% of score, SO In return Lowering your scores. PLUS its another 7 years from the DLA. So that account could really be on there for 10 years.

The bureaus not care about the $ on your negative accounts. They just care about how many negative accounts you have. More account-Lower your score, Lower your score more time your going to get your credit pulled. That mean they're getting paid every time.

Answer 3

did you pay off old/delinquent debts? This can, in a way, 'refresh" the debts--- if it was a 5 year old collection, for instance, it is old enough that it doesn't effect you quite as badly-- but by paying it, the 'last reported' is now more recent.

Try initiating a dispute and getting them deleted-- I've had success about 50% of the time.

You didn't close accounts, did you? Like credit cards? That can hurt.

Did you look at the report or jsut your score? Has anything else changed? Has the 'paid off' stuff even gotten reported yet?

Answer 4

Ordering your own report does not lower your score. So that's not it. What I'm thinking is that the bills you paid off had been dormant for awhile. In other words, you haven't made a payment to them. And then you paid the cards off, making the activity more recent. Thus, lowering your score.
I was told not that long ago by a mortgage broker, that my score looked worse because I tried to do the right thing and pay off my bills. As he said, it's backwards.
The longer a debt remains unpaid, the less of an impact it has.

Hope this helps.

Answer 5

Here's the problem...you paid off all your bills, but the credit bureaus are probably still showing the data from last month. The scores won't be updated until your next closing date on those accounts. And the reason it dropped was because you made an additional credit inquiry, in other words, ordered another credit report and that dings your credit score slightly.

http://www.thetruthaboutmortgage.com

Answer 6

Credit Scoring - How it Works

Credit scoring is a statistical method that lenders use to quickly and objectively assess the credit risk of a loan applicant. The score is a number that rates the likelihood you will pay back a loan. Scores range from 350 (high risk) to 950 (low risk). There are a few types of credit scores; the most widely used are FICO? scores, which were developed by Fair Isaac & Company, Inc. for each of the credit reporting agencies.

Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your score.

Different portions of your credit file are given different weights. They are:
35% - Previous credit performance (specific to your payment history)
30% - Current level of indebtedness (current balance compared to high credit)
15% - Time credit has been in use (opening date)
15% - Types of credit available (installment loans, revolving and debit accounts)
5% - Pursuit of new credit (number of inquiries)
The most important factor for a good credit score is paying your bills on time. Even if the debt you owe is a small amount, it is crucial that you make payments on time. In addition, you may want to: keep balances low on credit cards and other "revolving credit;" apply for and open new credit accounts only as needed; and pay off debt rather than moving it around. Also don't close unused cards as a short-term strategy to raise your score. Owing the same amount but having fewer open accounts may lower your score.