Quote:
Originally posted by dpezzo
NoSoup,
Thank you for the info on not maxing out. I had no idea that it will blemish. Well, of course now it makes perfect sense, though.
The question is, once you pay down the card, how long does it take (if it does at all) for your credit score to go back up?
I am sure there are other factors involved, but just curious as to rules of thumb and/or estimates.
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Well, as the Credit Reporting Agencies don't particularily care to give out their formulas in calculating scores, all I can do for you is make an educated guestimate, so take it with a grain of salt...
The score will be most impacted during the month(s) that the balance is reported near the credit limit. After that, your score will increase (I would guess 50%-60% of the lost points) during the first month that the balance is reduced below 50% of the credit limit. This is, of course, that it hasn't been near the limit for much of an extended time. During the following 3-6 months your score will continue to increase (I would imagine 70-85% of the total points lost) Once you reach the one year mark, it should have a much lesser effect, and when you get to 3 years, it should have very, very little effect. However, a "shortcut" around all this waiting is simply to increase your balances so that the high balace is at a lower percent of the maximum limit. Be forewarned, though, that requesting an inquiry on your bureau (having someone take a look at your credit) as well as increasing your unsecured limits will ding your credit as well. I would recommend this to most anyone that has exceeded their limits on their credit cards, or gotten very close to their limits.
If you have any more questions, just ask
