What should I do with 8 grand.

[NonSufficientFunds]

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@YHWHUDAH wrote:

Good Morning,

Here is a little history, I closed on a mortgage 2011 and since then I have pretty much maxed out all my available credit. My current utilization is 61% out of 60 thousand available credit. I have a total of 8 credit cards and 4 retail cards. In addition, I owe 28000 on a 420000 car loan and have cosigned for my wife on a 25600/26000 loan.

I have never missed a payment, and I do not have any baddies. My account history is 12 years a AAOA is 4 1/2 years. According to MyFico my Equifax is 638.

As of today one credit limit has been decreased by 2500.

Here are my balances and limits:

Card 1 935/8200 Military Star

Card 2 1200/1500 Capital One

Card 3 1235/1400 Capital One

Card 4 1919/2000 USAA

Card 5 1889/2000 Chase

Card 6 2200/2500 Capital One

Card 7 3800/4500 Walmart

Card 8 4700/5000 Capital One credit limit decreased from 7500

Card 8 4800/8000 Lowes

Card 9 6200/6500 Penfed

How will you suggest I utilize the 8000 grand; Pay off 5 small card limits or pay off the higher interest cards? According to MyFico the top three things that are hurting my score are utilization, multiple accounts that are maxed out, and multiple accounts carrying and reporting balances. If I reduce my utilization down to 10 percent my score will increase to 708-748 according to the MyFico Simulation.

Thanks in advance.

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With so many accounts showing a balance (and very high balances at that), your FICO scores are going to be in the deep dumps.

In addition, you will be in a very bad position when/if any kind of emergency occurs.

You might consider paying down all of your balances with a debt consolidation loan from P2P services, like Lending Club or Prosper. 

These loans are fairly easy to qualify for, and although the fast cash will not reduce your actual debt, it will allow you do reduce your credit card balances, providing you with some capacity to handle an emergency, and also helping your FICO score, by adding to your "mix" of credit types.

[YHWHUDAH]

NonSufficentIncome,

I never though about getting a debt consolidation loan. Will such a loan hurt my Fico score, such as have bad remarks? If not after I pay down 8000, would it be smart to then apply for a consolidation loan?

[newUser0]

One way is to sort these cards by increasing order of balances and then start paying from top.

Advantage here is that , you can make some cards 0% and it will reduce the number of Cards reporting balance.

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@YHWHUDAH wrote:

Good Morning,

Here is a little history, I closed on a mortgage 2011 and since then I have pretty much maxed out all my available credit. My current utilization is 61% out of 60 thousand available credit. I have a total of 8 credit cards and 4 retail cards. In addition, I owe 28000 on a 420000 car loan and have cosigned for my wife on a 25600/26000 loan.

I have never missed a payment, and I do not have any baddies. My account history is 12 years a AAOA is 4 1/2 years. According to MyFico my Equifax is 638.

As of today one credit limit has been decreased by 2500.

Here are my balances and limits:

Card 1 935/8200 Military Star

Card 2 1200/1500 Capital One

Card 3 1235/1400 Capital One

Card 4 1919/2000 USAA

Card 5 1889/2000 Chase

Card 6 2200/2500 Capital One

Card 7 3800/4500 Walmart

Card 8 4700/5000 Capital One credit limit decreased from 7500

Card 8 4800/8000 Lowes

Card 9 6200/6500 Penfed

How will you suggest I utilize the 8000 grand; Pay off 5 small card limits or pay off the higher interest cards? According to MyFico the top three things that are hurting my score are utilization, multiple accounts that are maxed out, and multiple accounts carrying and reporting balances. If I reduce my utilization down to 10 percent my score will increase to 708-748 according to the MyFico Simulation.

Thanks in advance.

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[NonSufficientFunds]

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@YHWHUDAH wrote:

NonSufficentIncome,

I never though about getting a debt consolidation loan. Will such a loan hurt my Fico score, such as have bad remarks? If not after I pay down 8000, would it be smart to then apply for a consolidation loan?

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Your credit report will be pulled (just like any other application for credit), but the loan would only be reported as an "installment loan" - there will be no remarks regarding what the loan was for, so you have nothing to worry about regarding any negative report.

Just visit the Lending-Club and Prosper sites, to get a better idea of how they operate... You have nothing to lose by looking into it.

Good Luck !!!

[YHWHUDAH]

Thanks, newUser0 you are refering to the debt snowball method.

[maksimfa]

Am I the only one who caught the fact that you have a 42k auto loan, and just got wife a new 26k one... And you want to get a new loan in 2 years?

you are a slave to your debt. I hope you are not buying brand new cars all the time. If so, the economy and shareholders thank you.

instead of worrying, about overpaying, pay off highest apr first, transfer if you need to.

[longtimelurker]

Along with a few of the other replies, don't worry about utilization or FICO score.  Utilization problems (and score concerns from it) are just snapshots, if the deeper issues are fixed those will go away.

Your big issue is debt and the interest charges you are paying.   So, simply pay off highest APRs first, this is the way to reduce wasted money on interest.  Yes, you may get balance chased, but that will happen, or not, anyway.

[Leadberry]

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@maksimfa wrote:

Am I the only one who caught the fact that you have a 42k auto loan, and just got wife a new 26k one... And you want to get a new loan in 2 years?

you are a slave to your debt. I hope you are not buying brand new cars all the time. If so, the economy and shareholders thank you.

instead of worrying, about overpaying, pay off highest apr first, transfer if you need to.

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I don't see anything wrong with having a new car loan nor with cosigning on DW's loan.  So what if OP wants to buy new cars?  That's his choice.  He clearly is working to keep his debt under control.  I don't see how this makes OP a slave, nor how it gives you the right to criticize how he chooses to live his life.

[youngandcreditwrthy]

I would KEEP the 8,000 in a savings account, such as an Amex Personal Savings and pay the $1500 you claim you can monthly. Do not pay only the minimums on all cards. pay way more! Only paying the minimum will get you AA with most lenders except Discover LOL

If you were to pay 8000 all at once, imo, it will set off a red flag to the lenders, and you will get CLDs or balance chased. Get your util around 50% primarily, then maybe try to get a BT card.

I suggest your primary focus to be on getting a good BT card once your total balances are below $20,000. I would also suggest calling Credit Solutions for CLIs on all GECRB cards... maybe ask for 15-20K on each. This will  help util.

I have about 15-18k of cc debt myself, but it is also at 0%.

[longtimelurker]

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@youngandcreditwrthy wrote:

I would KEEP the 8,000 in a savings account, such as an Amex Personal Savings and pay the $1500 you claim you can monthly. Do not pay only the minimums on all cards. pay way more! Only paying the minimum will get you AA with most lenders except Discover LOL

If you were to pay 8000 all at once, imo, it will set off a red flag to the lenders, and you will get CLDs or balance chased. Get your util around 50% primarily, then maybe try to get a BT card.

I suggest your primary focus to be on getting a good BT card once your total balances are below $20,000. I would also suggest calling Credit Solutions for CLIs on all GECRB cards... maybe ask for 15-20K on each. This will  help util.

I have about 15-18k of cc debt myself, but it is also at 0%.

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I really disagree with this!   Parking the money in an account earning 0.85% while paying out interest above 20% makes very little sense to me.   And the $8K payment can be spread among two or three cards, so I doubt if any red flags go up from that.

And, IMO, caring about UTIL or score in this situation is totally the wrong focus.   Reduce interest payments, then the 1,500 a month can more effectively reduce balances.  Eventually, UTIL and score recover, whereas interest paid is gone forever.