How many points can your credit score increase after paying off a debt?

Question

Thanks!

Answer 1

It depends on a number of factors...Let me give an example...if you had a credit card with a $10000 limit and you were carrying a balance of $1000 paying off this loan would not result in as much of an increase as if you had the same $10000 limit credit card and was carrying a $9000 balance which you paid off. This is just one example, many factors are involved. Good Luck

Answer 2

You need to understand something before you start paying off old debts.

If you pay the debt, all the creditor is required to do is change the status to "paid"...but all notes about late fees, charge offs and collections will still be there. It's still a bad report and will hurt your credit score.

To make it worse...if this debt is old (5+ years) and you pay it, you actually will HURT your credit score MORE!. The reason is when calculating your scores, older debts lose importance and are not as big a factor. But once you pay the debt, it turns it into recent activity, and that looks worse. Funny how it works....pay off a debt and hurt your score, but it's true. Wonder why the collection agents don't tell you about that?

What you need to do is negotiate with the collection agent. Tell them that in exchange for paying the bill, they must delete your credit report. Get this IN WRITING and don't pay them a dime unless they agree. Otherwise you are tossing away money and it's not helping you a bit.

Answer 3

Maybe it goes down. A credit score derived from a very complex set of statistics, those include your current credit profile, past credit profile, changes to your credit profile, how those changes have occured, the history of others with similar credit profiles, etc.
Overall credit scores increase rather slowly. If you are not over extended, and that loan was not past due, then it might have an impact of 2-10 points over 3 months.

Answer 4

20 to 40 is what a lender has told me.