December 15, 2006

Understanding Credit Score - Will Paying Off Your Debt Raise Your Credit Score?

While perusing the internet I ran across a true and false quiz regarding credit scores. As strange as it may sound, I found taking the quiz to be fun. So let's have some fun.

True or False

Your embarrassing credit score can be fixed by paying off your debt?

False.

Paying off your debt will definitely not hurt your credit score, but it will not be a miracle cure. Four of the factors that go into calculating your credit score are not influenced by how much money you owe.

payment history
credit mix
length of time you have had credit
new credit are not influenced by how much money you owe.

So, these four factors will not change if you pay off your debt. One criteria however, how much you owe, will be positively impacted, but not enough to be a miracle cure for your credit score problem.

Come back tomorrow to have more fun with the next question. Remember, if you’re not working the system, it’s working you.

PapaJoe