Credit Score Increase Timeline?
I just recently applied for a motorcycle loan, only to find out that I had been denied because of a tarnished credit score. I took a look at my report for the first time in 27 years (not knowing anything was wrong, and never having any issues before now) and Im ready to fix and monitor it. I found out about two potentially bad closed but negligent accounts (local and long distance phone bill from several years ago, ex g/f, long story) that had just popped up within the last month. I immediately paid them both off for the full ammounts, even though they offered a settlement. They told me that the credit bureaus would be notified within 1 week. I have 3 credit cards, not maxed out, but with fairly high balances, which Im going to be paying down to the 30% area within the next week also. All things considered, how soon could I expect my credit score to increase to a more favorable number? I currently find myself at 590. Any tips for a speedy recovery?
Public Comments
- Paying the account down is probably the most favorable thing for now, it would have been nice if you would have given the collection accounts a " Pay to Delete " letter before you paid them. This way there would not have been any entry of these accounts. Right now it's just a waiting game, maybe you can see if you can dispute the negative information from the closed accounts off of your credit bureau report. Also, when they told you that the credit bureaus would be notified in a week, that just means that they would be notified that you piad this debt, it doesn't mean that your score will be changed because you paid his debt off. The negative information is still on the report, because the account was in default. Just because you pay it does not mean that it should come off. You will need to check on this situation and follow up to see what's on there.
- Paying off those derogatory phone bills will actually cause your score to drop further. The older an item, the less impact on your score. When you paid those old bills, they became current transactions and count more in your score calculation, including all the negative parts. Also, paying in full instead of taking their settlement offer is really only very slightly better. You should have asked for a delete for pay. They probably would have accepted, even at a discounted rate. This would have completely removed the item from your report and helped your score. You might try to dispute the item in 2 or 3 months. The collection agency may not verify back to the credit bureau since you paid in full an the item be removed. Paying off the credit card balances will be the quickest way to boost your score. After you get them below the 30% mark, it may take 30 to 60 days for the credit card companies to report and your score to update. The best thing you can do for your score is to maintain a consistent, on-time payment history.
- Don't worry - you have done the right thing. You are also taking the best correct next step in getting your balances down to below the magic 30% However, it will take a full month for your score to improve simply because the credit bureaus work in monthly repoting cycles. It sounds like you have learned a lot from finally getting your reports and checking them. If you want to know more on how credit scoring works, the webpage below describes how the FICO scoring formula works in detail, and how to optimize each of your 5 scoring areas.
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* Some answers may have been provided by Yahoo! Answers.