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What happens to my FICO if I let Citibank

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Anonymous
Not applicable

What happens to my FICO if I let Citibank

I really need help.  I have about $75,000 in credit card debt.  I always pay on time and my Fico is 712.  However, I am fully maxed out and need a way to pay down principal because I spoke with Citibank ($40,000 is on this card) and they said that they would lower the interest rate to ZERO for 12 months and let me pay 1% , $400 a month, but this would close the card.  So, this is not a settlement but rather the bank closing the card with a payment plan.

 

A. How would this affect my FICO score?

B. I am considering doing this on all 4 cards that I owe on.  Thoughts?

C.  Would AMEX close my charge card because of these changes to my credit report, even though I regularly pay off this card each month (I need this card).

 

Please help. 

Message 1 of 12
11 REPLIES 11
MarineVietVet
Moderator Emeritus

Re: What happens to my FICO if I let Citibank


@Anonymous wrote:

I really need help.  I have about $75,000 in credit card debt.  I always pay on time and my Fico is 712.  However, I am fully maxed out and need a way to pay down principal because I spoke with Citibank ($40,000 is on this card) and they said that they would lower the interest rate to ZERO for 12 months and let me pay 1% , $400 a month, but this would close the card.  So, this is not a settlement but rather the bank closing the card with a payment plan.

 

A. How would this affect my FICO score?

B. I am considering doing this on all 4 cards that I owe on.  Thoughts?

C.  Would AMEX close my charge card because of these changes to my credit report, even though I regularly pay off this card each month (I need this card).

 

Please help. 


Hello and welcome.

 

 

A. How would this affect my FICO score? If you don't charge anything else on any of your accounts then as your utilization goes down it will have a positive impact on your score. Closing the account will not affect your score because it will continue to be included in your AAoA for up to 10 years after closing.

 

B. I am considering doing this on all 4 cards that I owe on.  Thoughts? Closing all your cards? I wouldn't do it but that's just me. Perhaps you can give more details about those other 4 cards.

 

C.  Would AMEX close my charge card because of these changes to my credit report, even though I regularly pay off this card each month (I need this card). I know nothing about Amex.

 

 

From a BK years ago to:
7/09 TU-742 EQ- 779
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802

You can do the same thing with hard work


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Message 2 of 12
Creditaddict
Legendary Contributor

Re: What happens to my FICO if I let Citibank

amex will probably leave your charge card alone but you might see less spending power with it, just make more payments on it if you try to charge a lot on it.

But I would for sure take this citi offer and if you can get it with other banks to sure, I would worry more about paying things off saving the most money over what will happen to your fico for the time being because as this debt comes down your fico will go back up 

Message 3 of 12
Anonymous
Not applicable

Re: What happens to my FICO if I let Citibank


@Anonymous wrote:

I really need help.  I have about $75,000 in credit card debt.  I always pay on time and my Fico is 712.  However, I am fully maxed out and need a way to pay down principal because I spoke with Citibank ($40,000 is on this card) and they said that they would lower the interest rate to ZERO for 12 months and let me pay 1% , $400 a month, but this would close the card.  So, this is not a settlement but rather the bank closing the card with a payment plan.

 

A. How would this affect my FICO score?

B. I am considering doing this on all 4 cards that I owe on.  Thoughts?

C.  Would AMEX close my charge card because of these changes to my credit report, even though I regularly pay off this card each month (I need this card).

 

Please help. 


 

I am just wondering what the interest rate is after 12 months?. If you pay $400 a month for a year, you will have paid $4800 leaving you a balance of $35,200.  ($40,000 - $4,800)  .  Did they mention an interest rate after the first 12 months?  I mean if they defer the whole balance of $40,000 Interest free and let you pay it off 1% a month that will take over 8 years, which seems like a very good deal for you.

 

Message 4 of 12
RobertEG
Legendary Contributor

Re: What happens to my FICO if I let Citibank

My considerations/observations.

First is that you must have fantastic payment history in your CR.  To have $75 K in CC debt, and maxed out on debt, and yet have a FICO score of over 700 demonstrates something you want to protect.

Second is that being maxed,or nearly maxed, on % util is a red flag for a credit limit decrease, regardless of your current good status with them.

YOu might get, at any time, a decrease in your CL, thus increasing your % util.

I agree with prior posts.  The Citi card offer is for 12 months, and that gives you some breathing room.

At the end of 12 months, you will have paid $4,800, reducing your balance to $35,200.  Little inprovement in % util,.

But in the 13th month, what will be your interest rate?  15%?  Default rate of 29.9%?

Assume, for purposes of numbers, that it is 18%.  That is 1.5% a month.  So the 13th month will h8it you for interest alone of approx $528, and a min monthly payment of at least that just to remain static.

If they cut your CL, then FICO will take a big hit.

I cant predict what the will do with your acount, but my experience is that high % util accounts are first on their choppin block for CL decrease, and that is where FICO mightt bite you.

 

Message 5 of 12
Anonymous
Not applicable

Re: What happens to my FICO if I let Citibank

Thank you so much for the quality response.  If I may elaborate...here is a fuller picture-

 

Citi -$40000 - 13.99 APR

Chase - $14000 - 18.14 APR

GM Card - $7500   - 22.99 APR

Discover $12000 - 24.99 APR

 

At this point I am at 99% Utilization (which I believe means my outstanding debt/overall credit lines).  My thought is that if I can suspend my interest rates for at least 12 months (have you heard of them going out longer?), I can eliminate about $30,000 in debt this year. I receive bonuses at work and can contribute about $1700 a month on top of those to this debt.  

 

Right now, I am just treading water and still paying $1700 a month and getting nowhere.

 

So, if I close let's say two of the accounts...how will the other two react?  Will my FICO plummet to the 500's or will the fact that I am reducing my debt on a payment plan actually get back close to where I am now? 

 

Lastly, I considered debt consolidation and settlement but I do not want the harassing phone calls coming to my home and upsetting my family.

Message 6 of 12
Anonymous
Not applicable

Re: What happens to my FICO if I let Citibank

Hi bashmobile!

 

One thing to consider is that even if the accounts are closed while you pay them off under a reduced or no interest payment plan, both the balance & the credit limit will still be counted in your overall utilization until the account is PIF/balance zero.

Message 7 of 12
marty56
Super Contributor

Re: What happens to my FICO if I let Citibank

AE closed my Green card when I first entered DMP even though I never had a problem with them.  I don;t know if they new law will stop them from doing AA though.

 

If you can afford the payments, A DMP will reduce the interest rates for the full repayment time which can be up to 5 years.  That will also protect you from futher AA.  By the time you finish the DMP, your FICO score will be what it would be now if you had no CC debt plus aging of account effects.

 

1/25/2021: FICO 850 EQ 848 TU 847 EX
Message 8 of 12
LisaPA
Regular Contributor

Re: What happens to my FICO if I let Citibank

I just wanted to point out that you have no idea if the other cards would be interested in making the same offer. Unless you've already gotten similar offers from the other cards, I don't think that's a safe assumption. Frankly, I'd be surprised if they did, but maybe you're very persuasive.

 

Message 9 of 12
Anonymous
Not applicable

Re: What happens to my FICO if I let Citibank

Thank you, Lil Mirth.  Since I am a novice in this area and with these boards, I am unsure if what you are saying is a positive or a negative. 
Message 10 of 12
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