Sunshine asked:


I recently deposited about $8,000 in my savings account. Over the next 5-6 months will this help boost up my credit rating which is currently a 678? I do NOT have any negative accounts. The reason for the low score is my debt to income ratio. I used a credit card to pay off my car and my score dropped significantly! I’m saving the money to buy a house, which is also why I would like to see my credit score go up some.

Thanks.
Actually, I never exceeded my available funds on the card. My credit limit was set at $25,000 and after paying the car off I still had available funds on the card.

I always pay my bills on time and pay MORE than the balance due. However, when I made the mistake of paying off the car I was still in college. I am now living on my own and have returned to school for my masters. My credit score is improving, but I’m not going to use the money I have saved for a house to pay off the car. I’ve been paying extra each month to that credit card and that will have to suffice.
Sgt Big Red…thank you said what I meant as far as using the credit card to pay off the car. I know paying it off will not drop my credit score, but using the credit card did do just that. I used well over 30% of my available credit to pay off the car.

Lester

4 Responses to “Will keeping a certain amount of money in my savings account help improve my credit score?”

1. E. F. Hutton on January 19th, 2010 10:42 am

   Bernard

   Keeping money in a savings account will have little to no effect on credit score. Using credit, paying on time, is the single best thing to build credit. Your score isn’t very bad at all. But these days many lenders want only the very best borrowers. You’d be better off using the money to pay down your debts.
   It wasn’t using a card to pay off the car that dropped the score, it was paying off the car that did it. Lenders want you to carry a balance and make payments. Pay at least the minimum, on time, every time. That’s how they make money. Even with a score under 700 you can get a loan if your debt to income ratio isn’t too bad. And it’s always better for your own financial security to carry as little debt as possible. I’d concern yourself with freeing up as much money as you can, pay down debts, than fretting over your credit score. When your monthly income is such that paying for a mortgage is viable you’ll find a lender without much difficulty.

2. Oh Wise One on January 22nd, 2010 4:53 pm

   Jason

   Just a few things to mention here. Your bank account has absolutely no baring on your credit score. Your bank does NOT submit your balance to the credit bureaus. So regardless to whether you had a million or one dollar in your account it won’t help.

   The reason your credit score dropped when you applied your car balance to your credit card was because you exceed your available funds. A great way to improve your score is to have a balance that is less than half of what’s available.

   So pay off that credit card, if you haven’t already and that will help your score. That’s the Debt in “debt to income ratio” that’s lowering your score. Having that money in your savings account is fantastic for buying a home because it shows you can save.

3. Sgt Big Red on January 24th, 2010 4:58 pm

   Joanne

   Well first lets clear some things up with the truth. Your savings accounts have no bearing on your credit score, they do not appear on your credit report and are not reported by the banks. Also there is no such thing as debt to income ratio on a credit report. Credit reports do not show your income and are not a factor in computing ones credit score.
   Debt to income is used to figure ones net worth and also considered when obtaining a mortgage.

   Next, paying off the car did not lower your score. Even if you pay off a loan early, your score will rise, NOT go down.

   What hurt you was your debt utilization. This is how much you owe compared to what your credit line is. When you charged the car to your credit card to pay it off you increased your ratio which lowers ones score.

   Once you exceed more then 30% of your available credit your score will start to drop. That credit card with the line of $25,000 should never exceed a balance owed of $7,500 to maintain a high score.
   The sooner you get your card balance down under the 30% threshold and more, your score will rise.

   Debt utilization counts for 30% of your credit score.

   Hope this helps answer your question.

4. bezhard08@att.net on January 27th, 2010 4:53 pm

   Bryan

   It goes by credit cards bank accounts. Money borrowed an
   payed off really counts. No late notices

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