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I recently paid off my credit card through a consolidation business. Will my credit go up and when is the best time to start using my credit such as in to buying a new home? I was told to wait three months, how true is that?

2007-02-09 09:50:32 · 8 answers · asked by pat13472002 1 in Business & Finance Credit

8 answers

Here's what you do with credit cards...Heat your oven to 350 and bake for about one hour.

Keep one credit card in your wallet, and only for emergencies. Seriously. If you can't buy it with cash, then do without.

Using your credit card does nothing to help your credit rating. Paying off your debt does. And if, after consolidation, you start racking up more debt, then you'll never be able to dig out.

So go at least six months without using them at all. then you'll get out of the habit of pulling one out whenever you want something, as opposed to when you need something.

2007-02-09 10:03:10 · answer #1 · answered by Anonymous · 1 0

The answer to this question depends on what sort of credit history you have. You say that you recently paid off your credit cards--does this mean that you have a history of late or missing payments? Or does this just mean you had a high balance and you finally paid it all off?

Basically, what is bad for credit is:
* Missing payments or late payments
* Having a high percentage of your credit used up (i.e. having a $3500 balance with a $4000 credit limit)
* Applying for a lot of accounts (i.e. credit cards or mortgage loans) in a short period of time.

What is good for credit is:
* Making payments on-time.
* Having a high credit limit but only a very small portion of it used up.
* Paying a higher total balance (assuming that the first two are true)
* Having a diversity of accounts and not too many (such as one credit card, one mortgage, one car loan, etc.) instead of like 6 credit cards.

The answer to your question will depend a lot on exactly what you DID before your credit was paid off. If you were paying bills on time and were well under your credit limit, and weren't applying for any accounts, then your credit should be good immediately. If you did some of these things though, you should wait (and pay your bills off completely, and on time) and build your credit up. If your credit was very bad, you may want to go for more than 6 months, like, a few years, to get the best rate.

Regardless of your situation though my basic advice is the same:
* Always pay your credit card bills IN FULL and ON TIME.
* Spend way below your credit limit. If you need a higher limit, call the bank up (after you've been using the card for a year or so) and ask them to raise the limit.
* Don't apply for accounts very often. Do your research before you decide what bank to have finance your mortgage. They will pull your credit report and then give you rates. If you "shop around", more banks will pull your report and this will hurt your score.

I hope this helps!

2007-02-09 18:06:26 · answer #2 · answered by cazort 6 · 0 1

If you just recently paid them off, particularly through a consolidation program, your first step is to get another credit card (I know that seems backwards). Get one through your bank (they know you) and ask them to keep your limit low ($500). Place charges on this card, BUT pay it off EVERY MONTH. After showing your ability to pay this monthly, it will show your responsibility with credit and, typically, raise your credit rating. Plus, not having any credit accounts open is actually a bad thing when applying for a large loan like a mortgage. This may take 3-6 months. Then, I would look into the mortgage. Make sure you tell your mortgage broker/ lender about your history, as they will be able to direct you towards products that will be best for your situation. When you first apply for a mortgage, your rate may not be fabulous, but as long as it is not outrageous, take it and pay your mortgage on time. After a couple of years, you should be able to re-finance your mortgage to get a better rate. Also, all of this (assuming you pay timely and don't abuse the credit) will increase your overall credit rating.

Congratulations on paying off the credit card debt! It is one of the best things you can do for your lifetime finances!

2007-02-09 18:02:20 · answer #3 · answered by Jodi F 2 · 0 1

The best time to use credit is never. If you want to buy a home, you do not have to wait. The bank will do a credit check after you apply for a loan. That may take awhile. It usually takes six weeks from the time the sale is agreed to, until the closing.

2007-02-09 17:57:20 · answer #4 · answered by regerugged 7 · 1 0

Wait about 3 months then call the companies that you where indebted to to make sure that they have taken these charges off of your credit. They won't always do it automatically. Then build up your credit by using a credit card once or twice a month for small purchases and paying it off as soon as you get your statement.

2007-02-09 18:02:04 · answer #5 · answered by Angie, Raised by Wolves 3 · 0 1

You didn't pay off anything. You just renamed the debt. The best time to use credit does not exist.

2007-02-09 19:10:03 · answer #6 · answered by STEVEN F 7 · 0 0

6 months to a year. It takes atleast that long remove bad credit and start raising your score

2007-02-09 17:58:23 · answer #7 · answered by Anonymous · 0 1

Since you paid them all off, it is best never to use them ever again. You don't want to go through that fiasco again do you.

2007-02-09 18:39:39 · answer #8 · answered by Anonymous · 1 0

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