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Established Contributor
Posts: 869
Registered: ‎07-04-2012
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Cards for people with high utilization

Good evening myFICO. I have a friend I study with that has been racking up debt like crazy for pretty much the last 6 months. To make a long story short, he got laid off from work around January (stuff at his workplace kept vanishing). He´s 20 with AAoA of 1 year 10 months.. Got EQ score of 668 from here.

 

This guy has literally maxed out almost every card he´s had and can only make the minimum payments on all cards. We have talked over and over in between classes and he could have about 75 bucks extra to work with.

 

Total debt: +7K Total Limit: about 19K He was at 65% when he got added as AU on his GF and mom accounts. Now he is at 35-37% ... He used to be about 20% 

 

Cards:

 

Citi Forward 3K CL: Maxed out

Bofa rewards: 1K CL: Maxed out

Discover Open Road 1K CL: Maxed out

Cap One 750 CL: Maxed out!

Macy 300 CL: Maxed out

Firestone 1250 CL: 230 balance

JCP 1900 CL: 400 balance

 


He says his  parents can´t help much as they themselves are suffering with the monthly payments on their own. I just don´t want him to f**k up on this as he´s a close friend of mine. I don´t think this is relevant to mention but he got added on this accs:

 

Citi Forward with 3K CL

Lowes with 5.9K CL

 

We want to decrease his util so he can apply for couple of cards with 0% intro with balance transfer as the interest is keeping him from decreasing the balances. I´m thinking about adding him to some of my accs, that would drop him back to the 20% util.

What card can he get with his current profile? He has had 1 30 day late in Jun 2011 with macys. He has already sent the GW letter and awaiting for response.

 

- Can he get a card with his current 35% util or just wait and add him to some of my cards and apply with 20% util?

 

- And what cards can he get accepted for with all those accounts being maxed out?

 

Any input is appreciated. I almost fell off my chair when I saw his CK. Our main worry is that he is right now not able to decrease the balance due to interest.

 

Fico Scores: . Walmart TU 748 . Garden 8/19 2014 .

Cap One Journey 500 | Discover IT 500 | GE Home Design 5.6k | GE HHGREGG 5k | Amex Zync NPSL | Amex BCE 6k | Citi Forward 4.2k | Citi Dividend 3k | GE BrandsMart 1k | GE Lowes 8.5k | Discover Walmart 7.5k | Barclays Apple 2.5k | BoA CR 2.7k | CSP 7.2k | Platinum Prestige 5k | IT Chrome 4k | Slate 2.3k |
Valued Contributor
Posts: 1,927
Registered: ‎06-21-2012
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Re: Cards for people with high utilization

Those cards are all relatively small CL's why not just take the time to "sno-ball" them to pay off the debt and get his finances in order rather than consolidating all the debt onto another card? I know getting the 0% APR with a BT would be nice, but it seems like it could be a while before he would qualify for a card capable to take on all the debt and receive 0%.

| Walmart $5k | Amazon $5k | NFCU $20k | NLOC $15k | Lowes $17k | BoA $15k | Freedom $3k | IT $5.25k | CSP $5k | Marriott $5k | AMEX TE $18k | Alaska $5k |
Starting Scores: EQ:571 EX:??? TU:597
Current Scores: EQ:694 EX:714 TU:711
Goal Scores: 700
across the board
Established Contributor
Posts: 657
Registered: ‎06-27-2012
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Re: Cards for people with high utilization

I don't know if lowering his uti will work.  lenders take into consideration each card maxed out singularly.  Try and pay off some of the CC's he's got.  Can't see lenders giving him more cards with as  many maxed out cards as he's got.

 

BOA: 8.9k
CSP: 5k
Discover: 5k
Citi TY Preferd: 5k
Wally: 5k
JCP: 4.9k
citiForward: 4.7k
ChaseFreedom: 4.5k
DFS: 2k
New Contributor
Posts: 184
Registered: ‎07-08-2012
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Re: Cards for people with high utilization

I noticed that you said your friend is 20 & that you study with him- if he's a student his best bet is to take out a federal student low (interest deferred while he's a student & for 6-12 months after graduation) & pay off his credit card balances.

Citi Thank You $13,200 - Chase Freedom $3,100 - AMEX Zync NPSL (init. ability $17.5K) - Citi Forward $7,000 - AMEX BCP $6,000 - USAA Rate Adv $15,000 - USAA World MC $12,000 - Discover More $4,000 - Amex Hilton Honors $4,500 - Amex SPG $2,000 - Barclay's Priceline Rewards $6,400 - Chase Sapphire Pref. $7,500

EQ: 794. TU: 704. EX: 755
New Contributor
Posts: 184
Registered: ‎07-08-2012
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Re: Cards for people with high utilization

Also, he sould prob call all his credit card companies & request an apr reuction. It never hurts to ask. Woese thing they say is no. I would suggest he try to pay off that $300 Macy's balance asap- their interest rates are ridiculously high- not worth all the coupons/discounts they bated him with to use the card. 

Citi Thank You $13,200 - Chase Freedom $3,100 - AMEX Zync NPSL (init. ability $17.5K) - Citi Forward $7,000 - AMEX BCP $6,000 - USAA Rate Adv $15,000 - USAA World MC $12,000 - Discover More $4,000 - Amex Hilton Honors $4,500 - Amex SPG $2,000 - Barclay's Priceline Rewards $6,400 - Chase Sapphire Pref. $7,500

EQ: 794. TU: 704. EX: 755
Valued Contributor
Posts: 1,927
Registered: ‎06-21-2012
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Re: Cards for people with high utilization


LilNYC wrote:

I noticed that you said your friend is 20 & that you study with him- if he's a student his best bet is to take out a federal student low (interest deferred while he's a student & for 6-12 months after graduation) & pay off his credit card balances.


I'm sorry but i would have to completely disagree with taking out a student loan to pay off credit card debt. That is very very poor advice.

| Walmart $5k | Amazon $5k | NFCU $20k | NLOC $15k | Lowes $17k | BoA $15k | Freedom $3k | IT $5.25k | CSP $5k | Marriott $5k | AMEX TE $18k | Alaska $5k |
Starting Scores: EQ:571 EX:??? TU:597
Current Scores: EQ:694 EX:714 TU:711
Goal Scores: 700
across the board
New Contributor
Posts: 184
Registered: ‎07-08-2012
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Re: Cards for people with high utilization


j_casteel wrote:

LilNYC wrote:

I noticed that you said your friend is 20 & that you study with him- if he's a student his best bet is to take out a federal student low (interest deferred while he's a student & for 6-12 months after graduation) & pay off his credit card balances.


I'm sorry but i would have to completely disagree with taking out a student loan to pay off credit card debt. That is very very poor advice.


why do you disagree? Student loans have low interest while credit cards have astronomical interest even if they start off with promo rates. This was actually somerhing 1 of my biz professors advised students ages ago when I was in college.

I should note that I never took out a loan of any kind so I apologize if I gave misinformed advice. It just seemed to make sense when I first heard the suggestion. 

Citi Thank You $13,200 - Chase Freedom $3,100 - AMEX Zync NPSL (init. ability $17.5K) - Citi Forward $7,000 - AMEX BCP $6,000 - USAA Rate Adv $15,000 - USAA World MC $12,000 - Discover More $4,000 - Amex Hilton Honors $4,500 - Amex SPG $2,000 - Barclay's Priceline Rewards $6,400 - Chase Sapphire Pref. $7,500

EQ: 794. TU: 704. EX: 755
Established Contributor
Posts: 869
Registered: ‎07-04-2012
0

Re: Cards for people with high utilization

Thank you for the responses. He is committed to make a big effort to pay down his bebt. Almost all the money he can pay is going towards interest right now, which is not helping. I tought about the BT idea as an option but as pointed out, It´s highly unlikely there´s going to be someone willing to lend this guy money with all those accounts maxed out. Also, reducing his util is no longer an option is it?   will tell him to call the creditors and get APR reduced as well.

 

He´s a good guy unfortunately he can´t pay for what he´s bought. Everyone make mistakes. Some of you have made the same mistakes as him, some of you haven´t. We are all here because we want to improve our credit profle, give advice and learn from other´s experiences. I don´t know how student loans work and I don´t know if it´s a good idea or not but if there´s a way to reduce the high interest, there would be a way to save him money and hence a way we would appreciate knowing of.

Fico Scores: . Walmart TU 748 . Garden 8/19 2014 .

Cap One Journey 500 | Discover IT 500 | GE Home Design 5.6k | GE HHGREGG 5k | Amex Zync NPSL | Amex BCE 6k | Citi Forward 4.2k | Citi Dividend 3k | GE BrandsMart 1k | GE Lowes 8.5k | Discover Walmart 7.5k | Barclays Apple 2.5k | BoA CR 2.7k | CSP 7.2k | Platinum Prestige 5k | IT Chrome 4k | Slate 2.3k |
Valued Contributor
Posts: 1,927
Registered: ‎06-21-2012
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Re: Cards for people with high utilization

[ Edited ]

LilNYC wrote:

j_casteel wrote:

LilNYC wrote:

I noticed that you said your friend is 20 & that you study with him- if he's a student his best bet is to take out a federal student low (interest deferred while he's a student & for 6-12 months after graduation) & pay off his credit card balances.


I'm sorry but i would have to completely disagree with taking out a student loan to pay off credit card debt. That is very very poor advice.


why do you disagree? Student loans have low interest while credit cards have astronomical interest even if they start off with promo rates. This was actually somerhing 1 of my biz professors advised students ages ago when I was in college.

I should note that I never took out a loan of any kind so I apologize if I gave misinformed advice. It just seemed to make sense when I first heard the suggestion. 


Putting the moral reason's aside, using a Federal student loan for anything that is not school related is fraud aka illegal. Not too mention adding more debt. that he'll have to pay after he graduates and if he can get a job to pay for that debt. Also, if the poop hits the fan and he must later in life file a BK then he'll have that much more student loan debt. that cannot be filed in the BK. Those are just a few reasons thats it not good advice. The whole picture much be looked at, and not the quick fix of getting him out of credit card debt. right now. You don't want to graduate college with a degree that is costing you much more than you're making. It just sounds like the guy needs to set a budget and stick to it. Sure, its going to be tough and take some time, but once he has the cards paid down or off then he can make sure that they don't get maxed out again. The debt is paid off and not something he'll be dealing with for years to come after he graduates.

| Walmart $5k | Amazon $5k | NFCU $20k | NLOC $15k | Lowes $17k | BoA $15k | Freedom $3k | IT $5.25k | CSP $5k | Marriott $5k | AMEX TE $18k | Alaska $5k |
Starting Scores: EQ:571 EX:??? TU:597
Current Scores: EQ:694 EX:714 TU:711
Goal Scores: 700
across the board
Valued Contributor
Posts: 1,927
Registered: ‎06-21-2012
0

Re: Cards for people with high utilization


CruzImperial wrote:

Thank you for the responses. He is committed to make a big effort to pay down his bebt. Almost all the money he can pay is going towards interest right now, which is not helping. I tought about the BT idea as an option but as pointed out, It´s highly unlikely there´s going to be someone willing to lend this guy money with all those accounts maxed out. Also, reducing his util is no longer an option is it?   will tell him to call the creditors and get APR reduced as well.

 

He´s a good guy unfortunately he can´t pay for what he´s bought. Everyone make mistakes. Some of you have made the same mistakes as him, some of you haven´t. We are all here because we want to improve our credit profle, give advice and learn from other´s experiences. I don´t know how student loans work and I don´t know if it´s a good idea or not but if there´s a way to reduce the high interest, there would be a way to save him money and hence a way we would appreciate knowing of.


The idea of using the student loans seems like a good one, but I speak from personal experience. I had no one offering me any advice (nor was I asking), so i would purposely take out more student loans than i needed to get a big refund check from the school after my tuition was paid for. I never read the promissory notes or anything and just wanted the money. I didn't realize what i was doing was actually illegal. Thankfully i never got caught or had to show proof of purchases of my "extra" funds. I make good money my current salary is $111,690 per year. I have nearly zero credit card debt. but while i was young i would continually take more and more student loans out to pay for things b/c i wasn't responsible or i was in between jobs. I racked up nearly $100k in student loan debt through my college career and even with my salary and making the minimum payments on all my loans is close to $900 per month and that is for their ~15yr payoff. $900 is a lot of money to be paying for student loans which could've been avoided if i were smarter or had someone helping me. When we're younger we are so optimistic and think all our plans for the future will just fall in line, and that once we get our degree we'll be set. It took me a while to finally get where I'm at, and i regret everyday that i took the student loans out like i did.

 

I'm not saying that this is what your friend will do or anything, but i'm just offering my advice and my experiences as an example of what not to do. Take the advice however you will, and help your friend make the best decision that will benefit him in the end.

| Walmart $5k | Amazon $5k | NFCU $20k | NLOC $15k | Lowes $17k | BoA $15k | Freedom $3k | IT $5.25k | CSP $5k | Marriott $5k | AMEX TE $18k | Alaska $5k |
Starting Scores: EQ:571 EX:??? TU:597
Current Scores: EQ:694 EX:714 TU:711
Goal Scores: 700
across the board
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