Credit Question?

Question

I just paid off a little over $4000 in credit card debt and a charge-off. The cards that I paid off had no available credit, and I went ahead and closed the accounts after I paid the balance in full. My debt to income ratio right now is only 21%, which I've heard is great. My question is about improving my credit score...will it go up now that my debt is paid in full? If so, how much? Also, could I have potentially hurt my credit by closing the accounts that I paid off? Thanks for any help!! We are going to be buying a house within the next year, so I could definitely use some pointers.

Answer 1

A big part of your credit score is the ratio of debt to available limit on your revolving credit. When you paid the cards off, that was good because it decreased the debt. But when you closed all the accounts, that was bad because it decrease your available limit.

Closing those cards also closes the credit history.

Do you have other credit cards? If so, pay them down to below 30% of their limit. If you closed all your credit card accounts, you may want to get a new one. Use it every month and pay it in full.

Best thing for you to do now, is put money aside every payday for downpayment money.

Answer 2

The low debt to income ratio is really good. I think I would have left the cards open - but if there was too much available credit for your income, I think that would have hurt, too. The FICO score should go up, but may not right away because you closed those cards. It should go up by the time you buy your house though.

Answer 3

it depends ... if u closed the account its not a bad thing , i have closed accounts that were'nt worth paying all the fees that i was paying and it didnt harm my score but any other cards that have little or no fees are better keeping open even if you dont use it ... now that charge off means the creditor closed that account and that doesnt look good on your credit, however being that u paid it in full its showing resposiblity on your part , anyway my advise to you is to check out this site.. my credit keeper.com and join for about 10 bucks a month and trust me its worth it , your credit these days is like your identity and threw this site not only will u be able to view your credit report on a regular basis but it gives you tips on mostly every thing u need to know about your credit and how to improve it... good luck...

Answer 4

Megan, Congratulations!!! I maxed out 7, count em---7 credit cards. Paid those bad boys off and now deal strictly in cash or debit card (can't spend more than you have in your account). Hope this helps and good luck with the new house.