Good Day Everyone,
I just found your forum via a web search and am so glad I did! Here's the short version of a long story. I was previously married and divorced, and completed a short sale on the house I had owned with the ex, as I was 60k *gasp* upside down on the house, a little over two years ago. Now am very happily remarried and am attempting to get credit up in preparation for purchasing new home with current husband in the spring of 2012. (the new FHA guidelines state that I need to wait 3 years after a short sale before securing another FHA loan).
Of course, the short sale crashed my credit score down to 550, but I'm happy to say that I'm currently back up to 648. Obviously, I need a much better score than that by this time next year so we can get a good interest rate on the new house. Throughout the whole thing, I've kept my credit cards paid on time- thank goodness.
Since the short sale, I had several credit card companies try to raise my interest rates in advance of those new laws going into place last year. I refused, and chose to keep the lower interest rates in exchange for them closing my account. As a result, I have only four open accounts, three credit cards (home depot, walmart, citi) totalling about 5k and 1 personal loan (hsbc) totalling 13k. These are all very close to their credit limits. I also have a couple closed accounts which still carry balances. (5k and 3k respectively)
So here's my situation- over the next several months, I'll have "extra" money coming in- through bonuses at work, extra paychecks, etc- cumulatively, I'll be able to pay down about 10k in debt. According to my current credit report through Equifax, a very high debt to credit limit ratio is my most influencing negative factor. Outside of paying off my 5k balance in the three open credit cards, am I better off paying down a portion of that open 13k personal loan account, or am I better off paying off the closed credit cards?
Is your "debt to credit limit ratio" dependent only on the balances of your OPEN accounts, or do closed accounts figure into that calculation as well? Personally, I'd rather pay off those closed ones to get them out of my hair and not have to send them payments, but if I get a better score from paying down the open stuff...that's what I'm most worried about.
Sorry for the long post, I'm just really excited to have found somewhere I think I can get real educated answers from!!!!
