if a person has really bad credit but they pay all their debt off...?

Question

...does that mean their credit rating goes up or does it take a while...what's the deal???

Answer 1

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Answer 2

It depends why your credit is bad.

If your credit bad do to late payments, collections or other such issues paying off debt wont make your score rise instantly. It will take time to get it bank up..

If your credit score is lower then it should be due to having much debt then it will go up faster. A big portion of yuor credit score has to do with debt utilization ratios. Meaning how much debt you have as compered to what your credit limits are on those cards. So if a high debt ratio is wahts dragging your credit down then paying off your debt will instantly help your score go up. Just remember not to close all the cards out. Keep them open but stillpay the balances off.

Answer 3

Every time you make payments on something it is a positive item on your credit, which will raise the score. But the negatives stay on there. It's not calculated by how much debt you have, it goes by how much you have been paying on time, and for how long. If you have been making monthly payments of $5000 a month on time for 3 years your credit is really really good. So if you have a loan for a million dollars, and have been making big payments and still owe most of it, your credit will still be very good if all the payments are on time, even though your debt is very high.

Answer 4

It will be a long process but paying off all your debts doesnt really make your credit rating better. It will make it easier to get financing since you have no debts but that financing will surely be at a higher than normal interest because of the risk that you represent but it will help yuo as long as you make good on the payments. That will help your credit score and with time you will get better interest offers for other loans or cancel that high interest loan. Remember banks like to loan you money, its their business to approve not to deny, so for example with bad credit and no debts you might get a high interest mortgage but in a year you can refinance at a lower interest provided you were good on your payments. Fixing your credit will cost you but it can be done and Ive seen it work.

Answer 5

I thought the more debt you were in the better your credit rating was as long as your making the payments.

Companies dont like people who pay off their debts in full as they then lose the interest.

My friend has never had credit in her life but her credit rating is crap due to the fact that you need plenty of credit to get the rating.

Answer 6

Bad credit is one of the worst problems to have... however there exists a solution.

I will hereby talk from my personal experience.

I did debt consolidation a couple of years ago, however If I had to do it again I would pay to some minor details,
if someone wants to get out of debt today it is pretty easy with a debt consolidation plan, however it may get a bit tricky at times, I suggest you get as much information as possible online on this first,

a good place to start in my humble opinion is astraight to the point ebook with question and answer I found :

http://umgarticles.atspace.com/debt-consolidation.htm

if it helps kindly remember me in your voting!.. cheers!

Answer 7

Your credit rating wont shoot up overnight, it will take time, maybe a couple of years. Just because you have paid the debt off, creditors are unlikey to lend to you at the moment, all your previous debt will still show on your history for 6 years. Stay debt free and your rating will improve over time.

Answer 8

I'm sorry but even if you pay your debts off your credit rating remains bad. You can look at your credit rating on experian

http://www.joincreditexpert.com/freecreditreportint/?sc=410006&bcd=interactivehomepage1

Just to check that monies you owed are shown as paid. It also gives useful addresses to contact if you think the record is wrong. Subsequently you can submit 200 word explanatioins that experian can attach to your account as mitigation against your bad debt. You may have to pay a joining fee to experian but trust me it's worth it!

Answer 9

it depends on if you keep open the accounts you had dept on. Your credit score is largely based on available amounts on credit cards and stuff. Its also dependant on delinquency payments, so if you had late payments or didnt make them at all, your score will take a while to come back up.

Answer 10

it usually stays on your credit history for 6 years.there are company`s that claim that they can improve some of the mass!!good luck and hope you make money with out all the banks involved they are the biggest thieves!!!!