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Should I pay off my credit card balance in order to obtain a higher credit score?


credit card balance: Should I pay off my credit card balance in order to obtain a higher credit score? I have a Chase Freedom credit card. I do not know if I should pay off my whole balance or just pay little by little. If I pay it off immediately will my credit score go up dramatically? Or does it not even matter? Thanks in advance!

Responses:
  • Here are some quick ways in less than 30 days! : 1. Pay down your credit cards. Paying off your installment loans may can help your score, but typically not as dramatically as paying down - or paying off - revolving accounts like credit cards. The FICO model and even from what we understand the Vantage scoring system now used by the Big 3 weight credit card debt more heavily. Each individual card as well as your total revolving line should be below 25 percent. If your goal is to increase your credit score - forget about paying down your high interest rate cards first. Work on getting those balances down over higher interest rates to reap the most improvement in credit score. 2. do not use your whole credit line every month, even if you pay your balance in full. Your available credit is averaged over your billing cycle, which is sometimes less than 30 days. If your limit is say, USD 5000 and you charge USD 5000, even if you pay it off each month, your credit balance is still going to show USD 2500 a 50 percent usage limit, which is going to make your score plunge. For most small business owners, their credit cards are the way they purchase goods and supplies every month. If the card's limits are used to the hilt - this can hurt. But wait you say, these are business cards. Yes, they are and most small business owners still have to personally guarantee their business cards, which means they show up on personal credit reports. If you need to use all of the available credit line on your cards, you may want to consider getting a new card to spread out the credit lines a little. 3. Is your credit report correctly reporting your credit limits for your cards? If not, you can call your credit card issuer and ask them to update the list. You can also challenge the limits with the credit bureaus. 4. do not use credit card issuers who do not report your credit limit. Usually this is a problem you only run into with secured credit cards, but were you aware that American Express cards and Capital One do not report credit limits? In this case the bureaus typically use your highest balance as a proxy for your credit limit, which is going to make you look like you are maxed out. 5. Ask a trusted friend or family member to add you to one of their old cards as an authorized user, maybe one that hasn't been used in awhile. The older your credit history, the better. If your mother agrees to put you as an authorized user on a card that she; had for 20 years, you could see your score increase dramatically. And with the authorized user plan, you do not even have to have the card in your possession if "Mom" feels better about this plan. You will have to work things out with her on this. 6. If you have been a good customer for years, but had a rough patch and missed a payment - you might be able to ask your creditor to "erase" a negative listing. You can do this with a goodwill letter. There is no guarantee that a lender will do this, but this method has had lots of success. Here is a sample letter to help you do this. 7. If you have a student loan that you have defaulted on or have missed payments, you can enter into a "rehab program" which will get your account back on track after 12 months ok, so it is not a short - term strategy. Sallie Mae regularly upgrades your loan status to "Paid as Agreed" if you make a series of 12 or so on - time payments. 8. Dispute old negatives. Say your insurance company never paid a medical bill and now you have a collections account. You can continue protesting that the charge was unjust, or you can try dis the account with the credit bureaus as "not mine. " The older and smaller a collection account, the more likely the collection agency will not have bothered to update good ole eOscar with the correct info and the credit bureau will not be able to match up computer records. 9. Get a collection agency to agree to remove a debt from your report if you pay it. This method is called "pay for delete" and it works like a charm on smaller amounts of USD 500 and under, especially medical collections. Remember to get the agreement in writing before you pay them anything, and only send a money order after you get them to agree. Check here for more info on settling debts. 10. Our patented method of dis with original creditors really works, especially accounts which have been purchased by other banks or are currently with a bank who has gone through some of those m ive mergers in the last 10 years. And you have the cases more common than you think where some banks just do not keep good records at all. This method is relatively quick. 11. Target "easy" errors on your credit report that have a bang for the buck. * Negatives that truly are not yours: Late payments, charge - offs, collections * Any Accounts listed anything other than "current" or "paid as agreed" if you paid on time and in full. * Accounts that are still listed as unpaid that were included in a bankruptcy. * Negative items older than seven years 10 in the case of bankruptcy that should have automatically fallen off your report. * Any account that is listed as "Closed by the credit grantor" when it was not should be fixed as this is definitely a negative
  • Try to use it and pay it off every month if possible. That will absolutely increase your score
  • Yep. Pay it off! Why support a credit card company with your hard earned money? Use them strictly as a convenience but do not give them any of your money in interest payments!
  • First of all it depends on what your balance is. If your balance is higher than 50 percent of your credit limit, that will affect your score the most. Having the card at 0 percent will give you the highest score, getting it below 30 percent will be the next major increase. I would say pay it off
  • pay it off
Tags: card, pay, credit, account, score
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