It’s almost been a year since I paid off all my debts, and closed off all of my credit cards. I know some people wonder, what happens when you do that.

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1. Understand Your Credit Score
– If you don’t go to college you can’t have a GPA
– But just because you don’t go to college doesn’t mean you can’t get a job
– What I mean is this, if you don’t have debt, you can’t have a credit score really for the most part but you can still borrow money to buy a home and even a car ( I don’t recommend you borrow to buy a car by the way)

But here is why:
– Your credit score is a track record of how you manage debt, how much you have, and how good you are at paying it off
– When you stop having debt, they can’t really track anything anymore

However:
– When you buy a house, they look at your bills and how you pay them
– Your income and how stable it is
– Your savings and if you have enough
– And based on that they can lend you money to buy a house ( no credit score needed )

The specific term is called: manual underwriting

2. When you Close your Credit Cards
– What is supposed to happen is this

A few of the Major Changes:
– Your Credit Age goes Down ( which can affect your credit score )
– Your Credit Mix Changes ( which can also affect)
– Your Credit Use Percentage can go up ( which can also effect )

The point is this:
– Closing accounts affect your credit score some way somehow
– And if you close all your accounts, after about 1 year or 2, you won’t have any history
– So if you plan on buying a home within 12 months, don’t do this yet

3. What actually happens to me:
– My credit score was 768 and I had debt ( student loans and Business loans, I had paid off my credit cards a while back but still had them open )
– When I paid off all the debt ( my score jumped to 811 )
– When I closed all my accounts and it registered ( my score dropped to 675 )
– Then after the adjustment ( it went up to 744 and it’s been around that level since then)

However:
– I do expect it to go away entirely

4. Is it worth paying off and closing off the debt
– The answer is Absolutely
– Being debt free, means you don’t owe anyone any money
– Not having a credit score to worry about, means you’re not trying to play some fancy game to keep a score that doesn’t matter

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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