pay off $60k in lump sums or over 3-4 months?

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pay off $60k in lump sums or over 3-4 months?

Postby gostauffergo » Thu Feb 03, 2011 12:02 am

Ok long story made short-

i flip houses and just finished a place that took a ton of money (about $135k) to fix up. about $60k of that was financed with credit cards. most of the cards i took out at the start of the project, so they are, or were up until last couple months, 0% interest. it ended up working out great. ill be closing on the sale of the house next week, and ill be paying off all the credit cards completely. yes, my credit took a big hit, but it is only temporary.

ive done the identical thing a few years ago. my credit was about 730, i filled up a ton of cards for a few months, it plummeted to 650, then i payed them off when the project was done and it spiked to 755 a month or two later. this is all normal and expected of course.

normally, immediately after i close on the house, i would just pay off all the cards in full. the questions come in at this point, because i have a realtor friend that claims if i pay off the entire balance on each card all at once, it will not be as helpful to my credit score as if i paid them off over a period of 3 or 4 months, sending payments of like 1/3 of the balance each month. like 50% of what this guy says is crap, but i know credit score mechanisms can be finicky, and he swears up and down on this, so he could be right. if he is right, then i can essentially buy 15 or 20 points on my credit score for $200 worth of interest payments. that is something ill gladly do.

so is paying off the balances over 3-4 months better for my score than paying them off all in a day? and please no speculation on this, only reply if you have some solid info.

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Postby DoingHomework » Fri Feb 04, 2011 1:31 pm

Hard to say for sure. But why would you want to pay the extra interest by delaying repayment? If the cards are still 0%, take the cash and put it in a money market for a couple of months until the interest rates rise then pay off all at once. As long as you are not getting deliquent your score will not suffer after you pay off the cards. As long as you have the charges though your score will be low because of high utilization.

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Postby Mogul of Pineapples » Sun Feb 06, 2011 7:53 pm

That realtor should have known that carrying high balances, using too much of the credit limits are what's not good for credit scores.

How much out of the credit limits are you using to have those kinds of balances?
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Postby Repo00 » Mon Feb 14, 2011 4:20 am

I almost missed this. How did you get cards with such high limits? I am tryign to pay for a house myself and need about $35 to 40k that will go on credit cards or some other unsecured financing source. My score is 727 and if you got $60k with cards and a 730 then tell me how to pull it off. Many thanks and much appreciation if you can help me out man.

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