I need credit advice?

Question

I purchased a vehicle last year for $30,000. I also had about $8,000 in debt in credit cards. I thought that by purchasing the vehicle my credit score would shoot up. I make all my payments on time. And I try to pay more than the minimum payment. I checked my credit score about 2 days ago and it actually went down from 697 to 536. I dont know what happend. I checked my credit report and I dont have any delinquencies or negative reports. I'm 21 and currently I have 7 credit cards. They are all maxed out. i payed 2 off and I closed those accounts. I'm about to pay 2 more off. What am I doing wrong? I dont use the credit cards anymore. I'm paying them off. I work 2 jobs. Any advice will help me. Thanks!

Thanks everyone. I actually cut up all the cards about 3 months ago..So I couldn't use them. I didn't know that if you closed the accounts it affects your credit score.

Answer 1

Don't close down your credit card accounts. Just stop using them or cut them up. Closing them down affects your credit.
I know what you're going through. Kudos to you for working 2 jobs for paying down your debt. Bankruptcy might be an option for you - but only as a last resort. Check out in your library or at your bookstore books from Suze Orman - she's a financial WHIZ about all this stuff. You're doing the best you can right now. Rule of thumb for the future though - don't spend more than what you earn. God Bless and Keep Looking Up!!

Answer 2

Your score went down because you increased your debt to income ratio with the purchase of the vehicle. This is a factor in the credit score.

By closing the credit card accounts and paying of the balance, your score will increase slightly but it takes sometime.

Continue to payoff your credit cards and close them out. But also, continue to make the payments on time. Check your score in about 180 days from now and you will see that it has increased.

Answer 3

♥ Well the vehicle loan wouldnt make it go up because you are borrowing $30,000. It does help a little after a full year of on time payments. As for your credit cards... its good that you paid two off currently but you should not have closed the accounts [[your score lowers when you close an account out]]. My suggestion to you since you are getting ready to pay off 2 more cards is to pay them off, but dont close the account. Put one away [[if you dont think you cant use it]] and keep one in your wallet. Use it for things such as gas or a small trip to the store... then when you spend that money pay it off completely when your payment is due. This will help your credit report greatly.

Good Luck!

Answer 4

The more debt you have out there, the worse your credit score is until they are paid off. A credit score is a grade they give you so when a lender checks to see if they should lend you money they can make a better decision. Now they would rather lend money to someone with 2 cards rather than 8. Itll go up once you minimize your cards. Also I have heard the minimum payment is good but paying in full each month is even better.

Answer 5

I just got a credit report and it came with a lot of advice as to what makes a credit score go up and what makes it go down. In your case, you are young and have substantial debt - adding $30,000 brought your credit score down because you are a higher risk - you are $38,000 in debt. It is also a negative that your cards are maxed out - that shows the credit company that you live beyond your means. Also, closing credit cards lowers your score. Keep the accounts open, just don't use them. You need to decrease your debt to raise your credit score. You are on the right track by no longer using the accounts and working on paying them off. Keep it up. When all of your cards are payed off, pay for everything in cash. Keep one card on you for emergencies only. As you pay off your car, your score will slowly rise.

BTW - Why are you buying a $30,000 car that you obviously can't afford? If you have to work two jobs to pay your bills, you are living beyond your means.

Answer 6

Well, you are paying off your debt, so you are moving in the right direction.

1. You paid off 2 credit cards, then closed the accounts, and your other cards are maxed out. You have no available credit... your balance is close to your credit limit.... this is very bad.

2. You bought and financed a $30,000.00 car. Unless you are a millionaire, why did you buy such an expensive car? You need to SELL your car, and buy something a little more reasonable, for CASH.

Your debt is way to high.

Answer 7

When I bought my truck last year, my score went from 680 to 620. No other changes...just $24,000 in added debt.

On the other hand, when I paid off my car several months later, my score jumped up to 650.

Pay off those credit cards! Ideally, you want to have two long-standing credit cards with 30% of max balance on them.

Work to close down five of those cards, and keep the two oldest open with small amounts on them.

Note in response to other answers: Keeping excessive open accounts is NOT a good thing - it shows lenders you readily have the ability to put yourself back in to neck-deep debt with something as simple as a few swipes of your zero-balance cards!

Answer 8

ok, definately use the card. using it for gas and small purchases only is a great starting point. but, don't pay it off that same day or all the time. you should keep a balance on it (even if its small) and continue to make payments on it. i have been told that this is a great way to build credit bcuz the banks earn a little bit of interest off of you.

Answer 9

by adding to you debt that would have lowered your score. you need to get those cards paid off and then check your credit score. the more debt you ad hurts no matter what payments you make

Answer 10

Don't close the accounts when you pay them off. It still looks like you are maxed out. If you have accounts with 0 balances you have some credit available which they like to see.