Credit Score

[ny96]

I used to have a fantastic credit score, but in the last couple months we got in a little over our heads with a home loan and have a credit card balance that has decreased my score from excellent to good. No late payments, just a high balance on our one credit card. We have the cash in our investment accounts to pay this off easily, but H wants to wait until preschool payments are finished in April to pay (right now we are able to pay what we are currently charging to the card. The concern for me is that we want to sell our house this fall and buy a new one. Once we pay off the card does anyone know how long it will be before my score goes up again?

[ellipses84]

It can go up pretty quickly but to I’d pay it off asap or at least a little more than one or two full billing cycle for all of your accounts. You’ll want to have the highest scores possible for a mortgage because with interest rates rising and a large home price, even a fraction of a percentage point could make a huge difference. Your credit ratio impacts your credit score too, so you could ask for a credit limit increase to lower your ratio. I would not open any new accounts. Is it interest free for a time? There’s no reason to hang out to credit card debt unless your investments are performing better than the interest you are paying (from a solely MM perspective).

I like my capital one card because it has a credit monitoring tool where you can create scenarios and it models different scenarios. Like if I paid off $10k in credit card debt in 4 months and always paid on time (for any account, not specific to cap1) how much would my score improve? It’s not exact but it can give you ideas of smart move to improve your score.

[ny96]

Jun 14, 2022 15:38:05 GMT -5 ellipses84 said:

It can go up pretty quickly but to I’d pay it off asap or at least a little more than one or two full billing cycle for all of your accounts. You’ll want to have the highest scores possible for a mortgage because with interest rates rising and a large home price, even a fraction of a percentage point could make a huge difference. Your credit ratio impacts your credit score too, so you could ask for a credit limit increase to lower your ratio. I would not open any new accounts. Is it interest free for a time? There’s no reason to hang out to credit card debt unless your investments are performing better than the interest you are paying (from a solely MM perspective).

I like my capital one card because it has a credit monitoring tool where you can create scenarios and it models different scenarios. Like if I paid off $10k in credit card debt in 4 months and always paid on time (for any account, not specific to cap1) how much would my score improve? It’s not exact but it can give you ideas of smart move to improve your score.

Thanks! We have a Chase Sapphire card which has the credit monitoring service and simulators. I would love to just pay this off and the money is just sitting in our account while we are paying interest on this card, but H is not in a good place right now and I think he thinks of this as our penance. I don’t want to confront him about this decision right now.