04-23-2009 09:24 AM
Hello and thank you in advance,
I am curious about what any of you would advise in our circumstance. We had a devastating financial setback 18 months ago and approximately $200,000 credit card debt. Somehow or other I was able to cobble together a series of credit card offerings that has sequentially allowed us to pay off this debt at 0% interest rates the whole time. By October of this year our 0% transfer balance options will all be expired and, assuming things go as they have been, I am not concerned that we will be unable to meet this deadline. At this point in time our credit rating is in the low 700s for both my husband and myself and we have the following outstanding balances that need to be paid off by October: AAA card balance at $11,336; a World Points card balance at $5040 (both cards from BofA); two Chase cards, one balance is 5803 and the other is 1807. At present, I am paying off all 4 cards with a plan that will have all four of them at $0 by October but I am wondering, in terms of credit scores, if I am better off paying the minimum on a few of them and focusing on paying off the larger balance sooner than October or if that matters at all. The cards that we currently use and pay off in full each month are a Discover Card, two Amex cards and a Visa card through BofA. We need to replace a car very soon and will be applying for a car loan.
Again, thanking you in advance
04-23-2009 03:53 PM - edited 04-23-2009 03:55 PM
I had a huge amount of credit card debt that I have been able to pay down substantially with 0% offers.
I have seen quite a few 10-40 point changes due to BT activity and utilization changes where I transferred money between accounts that show on my reports and accounts that don't show (business accounts). Want to see a big change - just do a BT on a personal account for $40,000 against a $46,000 limit to Amex LOC that didn't show on my reports!
One action that made a large score change seemed to be maxing out a Credit Line, which I understand is where you exceed 80% utilization on that CL.
Another action that made a large score change seemed to be having a balance on more than half of my open accounts. In my case that was 12 accounts out of 22 total. I remember a big drop from $54 showing on my Kohl's card! Don't forget that is balances showing on your report. Just because you PIF an account by the due date doesn't mean that there is zero showing on the report.
If we assume that all of the amounts in your posting represent less than 50% of each CL, you would probably get the biggest jump by paying off the low balance and having that account add to your list of zero balance accounts. This is where it is great to have a product like Scorewatch so you can see the change to your score fairly quickly.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions based on Experian or Equifax data (additional FICO® Score versions based on TransUnion data are not currently available on myFICO.com). Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.