Credit Utilization

[Anonymous]

So my husband ran into some medical issues and we had to use credit cards for our portion of pay after insurance.  This caused our credit card utilization to go up to 56%.  Our DTI is still under 30%;  no inquiries in a year, no lates on cars, cards, mortgage etc.  His score is at a 660 and mine is at a 645.  He has an expensive truck that we leased and the lease is up in 3 months so we are hoping to trade and lease something cheaper to put more money towards our debt. I know I can have it down to 25% in a year but we have to do something about this lease in 3 months.  My question is how hard will it be to lease a vehicle (looking at a Jeep Wrangler Unlimited) with such a high utilization %.  Everything else is good but this hurts us. I'm thinking of requesting credit line increase but was turned down by one due to this.  

[jdxprs1]

How much is your debt? What are your incomes? How much cash down do you have? Are those fico scores?

Hard to answer your question without more info.

[Anonymous]

Sorry about your unfortunate medical situation.  Bringing utilization down is extremely important because recent credit data shows increased chargeoffs so current lenders are a bit more tight fisted with people who have high balances.

One thing to keep in mind with medical costs is that ALL hospitals and clinics will provide for payment arrangements.  Never admit to having credit cards.  Never bring them with you to a hospital or clinic.  Always ask for payment arrangements, and if one person says no, talk to the next one.  These payment arrangements can generally be interest free and off your credit reports.  If you have future medical needs, let insurance settle as much as possible, and then arrange for payments with the balance.  I had a friend whose insurance didn't pay $60,000 of an emergency treatment, so he arranged to pay off $400 a month for 100 months with the hospital at zero interest rather than max out his credit cards.  The hospital is waiving $20,000 of the balance if he pays on time without skipping a payment for 8 years.  Had he put it on credit cards it would have ended up at $100,000 with interest once he was paid off.

[Anonymous]

Th unfortunate thing is this was dental/medical related so it was an outpatient procedure at an endontic office so payment arrangements were not an option - I asked. It was also $17,000 and it was an unexpected emergency. 

[Anonymous]

Ah dental, my nemesis.  Definitely not a place where payment arrangements seem to work unfortunately.  I personally never eat popcorn because it's the #1 reason for $5000-$10,000 worth of emergency gum surgery that insurance refuses to cover and happens every day.  

In my signature line is a credit helper spreadsheet that lets you put in all your credit card limits and balances and it suggest what dollar amounts you need to pay down to maximize your FICO score.

There are a number of personal loan websites from prime banks that will do a soft pull to make you an offer -- a personal loan with an interest rate even a few points below your credit cards can let you pay them off, reduce utilization significantly, and then the installment loan's balance counts far less on your FICO score as soon as everything reports.  That might be an option.

[Anonymous]

I beleive those are FICO scores ... theres so many types now! I think Credit Karma is a bit higher than these scores but I think they use VantageScore.

Our annual incomes combined are $213,000 ($17,750/mo) and our monthly debt with mortgage and all other debt is right at $5,00 so 28.17% I could do $6,000 - 8,000 cash down but a lot of cash down is somewhat pointless on a lease unless I need it to offset a high interest rate. 

[Anonymous]

I'm surprised your FICO scores are so poor with no late payments or derogatories.  Even with high utilization that's quite low.  How many credit card accounts do you have total, and how many of those accounts are over 89% utilization?

One option might be to spread utilization around all your accounts equally in percentage, and then try to pay them all down below 40% so you can get a nice score bump.

[Anonymous]

Yes dental is terrible and so are the two insurances we have as well!  

I was really considering a personal loan as a next option. It would consolidate the interest probaly to a 10-12% rather than the 16-19% on my cards. Plus a loan doesnt report utilization % like a credit card will. 

[Anonymous]

Combined we have 10 credit cards - 2 with 0 balance, 4 under 50%, 3 at 90% and 1 at 65%; utilization is the only thing that is giving me a low mark, category-wise, on credit Karma. 

[Anonymous]

Ignore Credit Karma always.  Their score is the same score that TransUnion used to sell to people and they got slammed by the feds for millions in fines for telling people VantageScores are real.  They're not.

Go to CCT and pay for their $1 trial to get your 3 real FICO 08 scores that lenders use.

You may want to balance transfer all your 90% utilization cards down to the other cards and get utilization under 39% across all accounts.  Having ONE account at 90% can ding your score up to 40-70 points on a clean profile.  Having utilization over 89% on multiple cards puts you in the highest risk category for clean files.

By moving under 89% you will get a bump and moving under 40% another bump and they can be significant enough to get you into prime FICO territory again.