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New Contributor
paulbrapp
Posts: 69
Registered: ‎07-26-2012
0

Need a little direction

Hello all..

 

Just looking for a little help from the pros.  I have about a $1000 bucks to put towards my credit card balances between now and next week.  My question is which route would be best.  I know you always want to pay off the ones with the high apr first but I have a unique situation so I don't think that really plays.  I am looking to apply for a mortgage next month and I want to put myself in the best possible position as far as score and dti.  My last statement cuts on the 13th.  Below is a list of what I have..

 

Chase 1472/1500 0%

Best Buy 1364/1600 0%

Crap 1 441/500

PSECU 263/2000 9% Statement cuts today

USAA 531/7000 13.9%

 

Currently sitting at 32% usage.  I'm looking to maximize my score and keep my dti as low as possible (which i would think paying off USAA and Cap1 would elimintate my minimum payment due and increase my DTI).  I also know that it is not good to have cards at or near their CL.

 

Thoughts...advice?

 

Thanks in advance,

Paul

Contributor
SpeedingWheels
Posts: 253
Registered: ‎08-06-2012
0

Re: Need a little direction

If you're going to apply for a mortgage you MUST get the Chase, BB and Cap1 balances down. They're all maxed. 

You need more than 1k to get all 3 of those below 50%... really need to be below that even. 


Walmart Discover ($5000) - Amazon ($5500) - Cap1 Cash Rewards ($2000) - Meijer ($5000) - Discover More ($1800) - Car Care One ($2100) - Amex Delta Skymiles ($2000) - Citi Thank You Preferred ($2000) - Chase Freedom ($500) - Sam's Club, GE ($1237?)
Moderator Emeritus
llecs
Posts: 32,869
Registered: ‎08-04-2007
0

Re: Need a little direction

IMO, I would pay the lowest balances first. Why? FICO like more accounts with a $0 balance than with and that'll probably increase your scores more than any other payoff scenario. Also you can eliminate at least 2 min. payments, and maybe a 3rd if you stretch it. I'd also eyeball your min. payments on your report in that scenario. I'm assuming you are gunning for a mortgage soon...I'd also weigh in the reported dates just in case the statement isn't scheduled for another 3-4 weeks.

New Contributor
paulbrapp
Posts: 69
Registered: ‎07-26-2012
0

Re: Need a little direction

I appreciate the responses.  Yes I am looking to apply for a mortgage in the middle of next month.  All of my statements will have cut by the 17th (cap1).  I guess I could really count cap1 out of this senerio since I can pay that the following week. (I will have gotten paid the friday before that)  So again I will have $1000 to spend between Chase, BB, USAA.. My PSECU statement cuts today so I am not sure if I pay it today will it effect this statement or not.  I agree with you that losing "min payments" seems like the best plan of action.

New Contributor
paulbrapp
Posts: 69
Registered: ‎07-26-2012
0

Re: Need a little direction

Anyone else want to chime in?

Mega Contributor
RobertEG
Posts: 18,528
Registered: ‎03-19-2007
0

Re: Need a little direction

An extremely difficult question, as FICO has three portions of scoring of % util, of which FairIsaac has not disclosed the relative weightings of each.

FICO has stated broadly that util of revolving is scored through

1. overall % util of all revolving

2. the % util of indivi revolvings, then combined in some manner, and

3.% of revolving reporting a balance.

 

Factor 1 is, of course, a wash.

Factor 2 requires knowing how FICO scores individ accounts vs their % util.  To the best of my knowledge, it is not a linear scale, meaning that the same decrease at higher utils has more impact than same % decrease at lower utils...e.g., going from 80 to 70% gives more improvement than going from 30% to 20%.

I would suspect that paying the highest % util cards first might give the most FICO bang.

Factor 3 can be contrary to factor 2, as getting one card to $0 wuold improve the % of cards with a balance, but might not address the highest util card.

No one knows the relative weigthing of % cards with a balance vs. % util impact of individ accounts.

 

It's not something one could predict without  a whole lot of anecdotal data and a whole lot of subjective analysis.

 

My presumption would be that the highest % util cards are doing the most damage.

New Contributor
paulbrapp
Posts: 69
Registered: ‎07-26-2012
0

Re: Need a little direction

Robert... thank you for you input.  I think I will go ahead and pay down the high balances first.  At first I was worried about my DTI but I don't think that would even be much of a factor since we are really only taking about <$100 a month if I were to pay off 2 or 3 of the cards.

Valued Contributor
my-own-fico
Posts: 1,308
Registered: ‎01-05-2010
0

Re: Need a little direction

[ Edited ]

441 + (1472 - (x *1500)) + (1364 - (x * 1600)) = 1000
x = 0.734516129 = 74% rounded up

1472 - (.7345 * 1500) = 371
1364 - (.7345 * 1600) = 188

441 + 371 + 188 = 1000

(441 - 441) / 500 = 0%
(1472 - 371) / 1500 = 74%
(1364 - 188) / 1600 = 74%

Are you living within your means?
Established Contributor
bettercreditguy1
Posts: 760
Registered: ‎02-11-2012
0

Re: Need a little direction

While getting all of your cc's below 50% looks best. your best bet is to get something zeroed out. +1 to getting rid of some of the min payments. You will also look better to the LO if some of your positive trade lines are at zero. Mentally and visually, it does not look like you are maxed out as bad.Then I would try to get each remaining balance below 50%. After that, maintain below 50 % on each account and tackle the highest interest account with your excess funds. In time, then strive for less than 20% and eventually, under 10% with your credit cards.

Starting scores 01/02/2012 EQ 707(Fico) TU 733(Fico) EXP 735 (FAKO)
Updated scores 06/01/2014 EQ 797(Fico) TU 768(Fico) EXP 769 (Fico), EQ 849 (Next Gen 5/27/14 Penfed)


Remember the Three P's: Pay early in Full, Pay on Time, Patience
Contributor
Croselx
Posts: 139
Registered: ‎07-31-2012
0

Re: Need a little direction

It may be too late since you said the statement cut was on the 31st, but I would of paid off the PSECU first. If cutting yesterday it would report faster than the other cards and positively affect you.

You said you could pay off Cap 1 so I'll take it out.

Pay half and half on Chase and BB to lower their util.

 

So $1000:

- $263 (PSECU)

= $737

- $437 (Chase)

- $300 (Best Buy)

 

 

Chase 1035/1500 69%

Best Buy 1064/1600 67%

Crap 1 0/500 0%

PSECU 0/2000 0%

USAA 531/7000 7%

OVERALL UTIL = 20.9%

 

If you didn't pay PSECU yesterday I would take those $263 and divide between Chase and BB and bring both their balances below 60%.

IMO having too many cards with high debt vs available balance will hurt you more than having 5 payments show up unless this brings your  DTI above what the bank requires. I think having 2 cards report at $0 can only help.

 

I had a lot of issues getting new credit with my first card being near 90% util. Once I got that down to below 25% I got approved for everything that I have applied for.

As of Feb: AAoA 1 year, 10 months
CK TU: 740; Wal-Mart TU FICO: 721
CS EX: 715
8 CCs, 15 total accounts.
Negs on report: 1 30 day late aged 3 years
5 inquiries

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