What should I do - balances?

[mb257310]

Hi all-

We need to get to a 660 and fast! We need to get some $$ out of our home (owe 155k, valued at 196k) to make some emergency repairs. Need about 14k, so we're out of the 80% LTV range.

We'd been in the 640 range until some inquiries, a new auto loan, and some high utilization of our CC's got in the way. There have been NO lates in 18 months, but nonetheless our scores have dropped to 615 and 595. I think it's primarily because of our CC's. Right now, I have the following:

• Card 1: 2000 CL - O Balance (newer card, super-low rate, bought it for emergencies)
• Card 2: 500 CL - 410 Balance
• Card 3: 300 CL - 265 Balance
• Card 4: 250 CL - 200 Balance (High interest, but longest card on books. About to be socked with a $90 annual fee)

Just wondering what I should do on these. Paying them completely off is not an option, but I'll have about $200 to pay them down. Should I:

1. Transfer the balances to Card 1 - I'd be a little under 50% utilization on that card, but at 0% on the others. Interest-wise, this makes the most sense. APR is less than half of other cards.
2. Pay off Card 4 - I'd have 2 cards at 0% utilization, and 2 at close to 75%
3. Pay a little to all 3 -  I'd still have one at )% and could get the others down a bit.
4. Rob a bank - I kid, I kid

I know the magic formula is to have one at <10% and the others at 0%. But given my circumstances, I'm hoping for the biggest bang for my buck, so to speak.

[OptimasPrime]

The way fico looks at your utilization now it seems as if you are maxed out or nearly maxed out on your 3 lower limit cards. Not sure who backs the cards below but it couldn't hurt to ask for clis across the board, which would lower your overall utilization.

From a fico scoring perspective you should see a fair jump in your scores if you go with option 1. Out of all the options you laid out number one is the the best in the sense that you'd save cash and get sizeable  jump in your fico scores. 

Edit- Only having one card reporting a balance rather than several cards reporting small balances typically increases your fico score, even if your overall utilization remains the same. For optimal utilization however, you would ideally have your highest limit card reporting a 1-9% balance and all other cards showing a zero balance. 

[Jlu]

Your utilization stands at 28% - not good but not bad. If you have a BT offer on card 1 I would BT all the balances to that card so that you are showing one card reporting and then pay it down as much as possible to a target of < 10% overall utilization.

If not possible then like the poster above says, ask for CLI on all 3 low limit cards. Especially if they are GE cards. Don't expect much though because they will frown upon extending more credit when you are maxed out already. Personally I think it's not a good situation when you need to borrow $14k for repairs but can't pay off $800 something dollars in CC debt.

[Revelate]

Option 1. It's the best decision financially (assuming the BT fees are reasonable but you're not talking huge balances); zeroing out some of the smaller limit cards and having the other at sub 40%, while not optimal, is about the best you can do right now FICO wise too.

How old are your tradelines? I'd be sorely tempted to close that fourth one pre-AF, especially if you're in a limited cash situation. Also I'd think about keeping the $200 as a short-term cash reserve from what you've described.

Edit: new machine w/scriptno = no spaces on FICO forums when blocked!  Oopsie.

[jamesdwi]

Pay off the $250 CL card, when AF hits call them ask for it to be waived if not close it.  

BT the other two balances to the $2000 card,  Take the money that you were about to pay on the $90 AF and pay down your debt. 

Then off to the garden to pay down your debt and let your cards grow and mature hopefully in a few month with lower UTL you may get back to the mid 600's again. 

[Crashem]

Best bet is to completely pay off card 4 with 200 dollars.  Move all other balances to card 1.  Goal is to have all balances on card 1.  Makes most sense fico wise and interest wise.  However be careful.  Make sure no recurring on any cards so 0 balance reports.  Need to do sooner than later to get them to report 0 balance.

[Revelate]

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@Crashem wrote:

Best bet is to completely pay off card 4 with 200 dollars.  Move all other balances to card 1.  Goal is to have all balances on card 1.  Makes most sense fico wise and interest wise.  However be careful.  Make sure no recurring on any cards so 0 balance reports.  Need to do sooner than later to get them to report 0 balance.

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Dunno, having zero cash looking for a 14K loan and outstanding balances: from a financial defensibility standpoint, I think that choice might be a little suspect personally.  With my employment having been so sporadic until recently, having a cash reserve is a huge benefit.  If nothing else $200 is sixish months of minimum CC payments at the current balances post transfer (4ish w/o BT).

Admittedly though, not having the full disclosure regarding the OP's financial situation makes this a little difficult to assess.

[Crashem]

He can keep his 200 and just move all balances to card 1.  In any case, moving all balances to card 1 is best bet fico and interest wise.  Op just needs to be careful to get cards 2-4 to report 0 balance.  That can be tricky given interest charges etc.

[youngandcreditwrthy]

I'd demand a higher limit on the $200 card with that pesky AF. Also, xferring those small balances to the larger limit card, assuming Bt fees and rates are reasonable is a great idea! Additionally, it would be wise to request CLI's on all accounts assuming NO HP.

[Crashem]

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@youngandcreditwrthy wrote:
I'd demand a higher limit on the $200 card with that pesky AF. Also, xferring those small balances to the larger limit card, assuming Bt fees and rates are reasonable is a great idea! Additionally, it would be wise to request CLI's on all accounts assuming NO HP.

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no don't demand any cli or anything that would risk any inquiries.