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What Kind Of Debt Pay-Off Boosts Your FICO Score Most?

Wednesday, July 6, 2011 - 10:46 AM
This MintLife blog post reviews the effects on your FICO score of paying off four different types of debt: mortgage, auto loan, credit card and a collection balance. It shouldn't be a surprise on what helps the FICO score the most.
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
1. Saturday, July 9, 2011 - 2:07 PM
I can give a real life example of this.

My Credit Karma score was 744 in May 08. At that time and for the next several months,

When I paid off my only large debt, a 0% credit card balance, my score improved to 765-770.

The 5 points may have been from something else.

So my score increased from 21-26 points by paying off somewhere in the $25k range, my only debt at the time.

(Other than small monthly credit card charges)

Later my score settled in at 769 for the next 16 months when a federal tax lien knocked it down to 681.

6 months later the tax lien was "released" but my score only improved to 692.

Just today, I got my tax lien "withdrawl" from the IRS, which, Im hoping will bring my score up to where it was...769.

I did not ask the IRS to send copies to the credit bureaus though so Im not sure if I should just send that info to them or wait a month to see if they get it on their own from my county probate where the lien was filled and subsequently withdrawn.

As for my FICO score, I have no idea. Never paid and never will pay.

Oh, and I just signed up for Credit Sesame. I think my score on it is 702.

They only update once a month, whereas CK you can manully do it every day if you want.
RJMRJM73 posts since
Jan 21, 2011
Rep Points: 409