better to pay off revolving debt or installment loans?

[Anonymous]

A few quick questions--

1. Are you planning to pay off the highlighed Firestone card with $250 of the $4k that you mentioned earlier, or is that 'in addition to' the $4k?
2. Are you planning to apply for credit (e.g. a new car, mortgage, credit card) soon? Is that the purpose of focusing on actions that will raise your credit score?
3. Do you know what your current score is? And, how soon are you looking to see an increase?

[waqaszm1]

answers:

1. the firestone is besides the 4k - i was planning to pay it off anyway before the accrued interest hit me.

2. somewehere around june i plan to get into navy fed, and apply for a credit card with pentagon fed. after that, in august, i am planning on a car ..

3. current equifax fico is 645, transunion is 639 ... i am trying to get past 700 as soon as i possibly can .... but i can give it till june ...

[Anonymous]

Okay, here's my $.02, given consideration to your overall goals. And, please remember that this is an opinion based on the limited information provided, and the goals that you've mentioned. You may, very likely, get differing opinions from other members.

Goal 1: Debt Paydown + Score Increase

Here are some of the issues that may be hurting your scores the most: You're starting out with 23 cards, more than half (14) with a balance, and 23% utilization. One card would be considered to be maxed out. Three are over 50% utilization. My suggestions (below) are based on the $4k that you have for immediate payoff + $250 for Firestone. My idea is that you get below 20% utilization, less than half of all cards reported, no cards "maxed-out" and as few cards as possible over 50% utilization. Then, I considered cards that were costing you the most $$$ (based on the APRs that you documented), and would, by paying off, free up the most money to put towards your remaining debt in a snowball approach. 

	Card	Limit	Balance	Current UTI%	$4250 Fund Distribution	Updated Balance	Updated UTI %
1	BoA Amex	7500	$            2,675.00	36%		$    2,675.00	36%
2	Discover More	5500	$            2,885.00	52%	$           82.00	$    2,803.00	51%
3	Cap1	2500	$            1,452.00	58%	$     1,452.00	$                -	0%
4	HSBC Cashback	2500	$            2,106.00	84%	$     2,106.00	$                -	0%
5	HSBC Plat(2)	2000	$               156.00	8%		$       156.00	8%
6	Barclays Apple	3500	$               800.00	23%		$       800.00	23%
7	Redstone FCU	5600	$               400.00	7%		$       400.00	7%
8	Amex HH	2500	$               800.00	32%		$       800.00	32%
9	Redstone FCU(2)	3600	$                         -	0%		$                -	0%
10	USAA MC	7000	$                         -	0%		$                -	0%
11	Reeds	2000	$               855.00	43%		$       855.00	43%
12	Macy's Store	7900	$            2,500.00	32%		$    2,500.00	32%
13	Bloomingdales	9000	$            2,463.00	27%		$    2,463.00	27%
14	CFNA Firestone *	3000	$               250.00	8%	$        250.00	$                -	0%
15	JCPenney	1500	$                         -	0%		$                -	0%
16	Spiegel	1300	$                         -	0%		$                -	0%
17	Kohls	2000	$               600.00	30%		$       600.00	30%
18	VS	1240	$                         -	0%		$                -	0%
19	Walmart	1000	$                         -	0%		$                -	0%
20	Chevron	840	$               360.00	43%	$        360.00	$                -	0%
21	Zales	2000	$                         -	0%		$                -	0%
22	Macys(2)	4600	$                         -	0%		$                -	0%
23	Express	1700	$                         -	0%		$                -	0%
			$          18,302.00	23%	$     4,250.00	$ 14,052.00	18%

[Anonymous]

...Continued because I actually reached the limit of charcters for 1 post!

Goal 2: Membership to NFCU & PenFed

Just a bit of food for thought, based on the "tribal knowledge". PenFed is very likely to consider the number of cards that you have, and the amount of of your remaining debt (revolving & installment) and raise the flag of "Debt Pyramiding". NFCU is pretty liberal with credit, but if you've got a lot of debt (your overall utilization isn't so high, but the number of individual accounts & dollar figures may make them blink), or the account history is fairly young with so many accounts, even they might get a little squeamish. I'd suggest that you put off a PenFed app for credit until you get any Consumer Finance accounts paid in full, and your overall utilization under 10%.

Goal 3: Auto Purchase

If you're planning to app for an auto purchase with PenFed, see my comments under "Goal #2". If you're planning to app with NFCU, get your debt down as low as possible, and make sure that your income + remaining debt will be in line with your proposed purchase.

My final thoughts are this-- You've got a lot of accounts (are they all open?), but your overall utilization isn't terribly high. Are a lot of these accounts new(ish), because your scores seem more impacted than the utilization might warrant. IMO (and take it for what it's worth) you might want to slow down on your apping. If it's not derogs holding you back, then you may be experiencing the effects of too much credit, too close together. And, only time is going to fix that. I'm not sure that any kind of debt paydown combo is going to to get you to 700 by June or July, but the more of your money that you can keep in your pocket is worth more than FICO points any day.

Good luck!

[waqaszm1]

@ lilmirth, thank you for your help. Its really appreciated especially the chart is awesome, i was'nt expecting someone to put in so much of their time into this. shows you care, whch is really nice of you.

i could not agree more with every word you said. and i am off to making payments as you set them in the chart; 

i think i am suffering from too many new accounts. went though a divorce a couple of years ago that cost me some of my nicest cards. ended up closing most to get out of the mess and safeguarding my credit. most of these accounts are after 2008. bank of america is closed; i reached an agreement with them to reduce apr to 5% and allow me to pay it off. i am way ahead of schedule on that one.

with penfed, i am already a member. and i will take your advice and wait it out till things get better overall, perhaps till jan 2012.

with nfcu, not a member yet, but will also wait till jan 2012. the car can wait as well. unless it suffers a breakdown before jan 2012, (in which case i could try usaa).

my goals are, pay off balances down to maybe 2 to 3 cards. sock every thing else. get rid of the hsbc and capital one stuff, and other banks, and convert all my credit cards to a credit union product., with the exception of usaa. reduce uti to under 10%, boost scores over 700, get a better, more reliable car, and then just let it all sit and enjoy the view ... no more apping after that for atleast 2 years.

[waqaszm1]

@ also, currently i have 3 inquiries on experian, 3 on transunion, and 6 on equifax. by november this year, all on experian and transunion would fall off, and equifax would be left with 1 inquiry.