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Posts: 13
Registered: ‎08-26-2016
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OTL & applying for new loans

[ Edited ]

Hi,

 

I have several credit accounts, but one of them is OTL.  I am looking forward to applying for both a new business line-of-credit, and a personal credit consolidation loan, and was wondering the best course of action. My accounts are as follows:

 

OPEN CC - AMEX - $0 / $30,000 (Authorized User only) 
OPEN CC - AMEX - $0 / $10,000

OPEN CC - MC - $0 / $300
OPEN CC - DISC - $0 / $1500

OPEN CC - VISA - $18000 / $20000

CLOSED Wells Fargo Personal Line of Credit - $8,000 / $5,000  (yes, it's $3,000 OTL)   - Credit report says Closed by (Wells Fargo), does not state reason.

 

Credit score is in the high 600's.  I have been making on-time payments for all accounts, except for 1 30-day-late and 1 60-day-late 1.5 years ago.

 

I now have the option of paying down an additional $3,500.  I was wondering if I should pay this down on the CLOSED line of credit (thus bringing it down below OTL), or on my OPEN VISA (thus decreasing my util. by the same, but leaving me with more OPEN/USABLE credit).  - More specifically, which of these would look better to a potential lender?  I will be asking BofA for a new busines line-of-credit, and turning to an online lender like Sofi or Prosper for a personal credit consolidation loan afterwards.   I guess my main question is would they absolutely freak to see the CLOSED account and the fact that it has been OTL for a while now (over 2 years, been making minimum payments on it), or would they not mind if they noticed that I have quite a bit of availalbe credit and other OPEN accounts which are much healthier, as long as I have been making all of my payments with the CLOSED account?

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Epic Contributor
Posts: 28,923
Registered: ‎03-19-2007
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Re: OTL & applying for new loans

In my opinion, the concern would be that you lack current assets (income, savings) to pay more than the minimum on the closed account.

You thus may be "living on credit" as opposed to living on your currrent assets.

Your credit report pe se does not show either savings or current income, so the reason for paying only the minimum on such a high balance card is left to conjecture as to the risk of ability to repay.

 

The closed account still scores under % util, and I would begin to make a substantial dent in that card ASAP to show that you have the assets to do so.

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Super Contributor
Posts: 5,759
Registered: ‎02-24-2015
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Re: OTL & applying for new loans


theguyincharge wrote:

Hi,

 

I have several credit accounts, but one of them is OTL.  I am looking forward to applying for both a new business line-of-credit, and a personal credit consolidation loan, and was wondering the best course of action. My accounts are as follows:

 

OPEN CC - AMEX - $0 / $30,000 (Authorized User only) 
OPEN CC - AMEX - $0 / $10,000

OPEN CC - MC - $0 / $300
OPEN CC - DISC - $0 / $1500

OPEN CC - VISA - $18000 / $20000

CLOSED Wells Fargo Personal Line of Credit - $8,000 / $5,000  (yes, it's $3,000 OTL)   - Credit report says Closed by (Wells Fargo), does not state reason.

 

Credit score is in the high 600's.  I have been making on-time payments for all accounts, except for 1 30-day-late and 1 60-day-late 1.5 years ago.

 

I now have the option of paying down an additional $3,500.  I was wondering if I should pay this down on the CLOSED line of credit (thus bringing it down below OTL), or on my OPEN VISA (thus decreasing my util. by the same, but leaving me with more OPEN/USABLE credit).  - More specifically, which of these would look better to a potential lender?  I will be asking BofA for a new busines line-of-credit, and turning to an online lender like Sofi or Prosper for a personal credit consolidation loan afterwards.   I guess my main question is would they absolutely freak to see the CLOSED account and the fact that it has been OTL for a while now (over 2 years, been making minimum payments on it), or would they not mind if they noticed that I have quite a bit of availalbe credit and other OPEN accounts which are much healthier, as long as I have been making all of my payments with the CLOSED account?


In my opinion you should definitely pay down the line of credit.


FICO8 EQ 780 TU 762 EX 784 FICO5 EQ 722 Total revolving 410500

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