If you pay off all your debt will you then have good credit?
October 23rd, 2011 | by admin |Kristen asked:
I’ve finally set up a way to pay off all my debt. By doing so I’m curious if I will be still stuck with a bad credit report for the rest of my life or will it turn into good/normal credit. Thanks for your help!
I’ve finally set up a way to pay off all my debt. By doing so I’m curious if I will be still stuck with a bad credit report for the rest of my life or will it turn into good/normal credit. Thanks for your help!
6 Responses to “If you pay off all your debt will you then have good credit?”
By T.J. on Oct 27, 2011 | Reply
Paying off your debt would cause your credit report to get better right away, but it may take a few more years of good credit mangement before your credit report is considered good.
By Dan B on Oct 27, 2011 | Reply
Your profile will improve, but not immediately. Your credit profile will show that you have no debts, of course. Then it’s up to the lender if they want to consider that good or bad based upon your income. If you have income and no debt, you could be viewed as a good candidate for the loan approval because you have the excess income to pay the loan (my case – I have no debt or credit cards). Other lenders may view you as a risk because eventually you’ll have no payment history after the debts have been paid off for 2 years or so..They will use any excuse to justify charging higher interest rates – that’s how they make their money.
Your credit profile will improve over time (2-3 years) and your score will go up. Mine is in the 800 range. But I really don’t care what my score is. I save up and pay cash for what I want, even if it takes 6 months or a year.
By the kid on Oct 29, 2011 | Reply
You will have better credit. But depending on if any of those debts were defaulted, etc it may not make it good. Any late and missed payments will remain on your record.
By Paul P on Oct 31, 2011 | Reply
Your credit rating will immediately improve if you pay off all your outstanding debt. If you then manage your credit carefully at all times in the future, over time your credit rating should eventually progress to good.
It is always far easier to ruin a credit report than it is to repair one.
By Jo W on Oct 31, 2011 | Reply
Not immediately – you still have to ‘live down’ your history. You are looking at three years as a minimum after all your debts have been settled.
By timothy p on Nov 4, 2011 | Reply
what type of debt?
paying down balances on revolving accounts? The impact will be immediately after the report the low balance. Leave the account open unless they charge fees.
Installment accounts? This would probably have a neutral impact. But save you the interest charged
Collection accounts? A paid collection is still a collection. It will remain on your report and kill your score for a little over 7 years. The biggest impact will be in the first couple of years and will lessen over time. Try to negotiate a pay for delete in writing before paying the debt.