01-27-2013 11:49 AM - edited 01-27-2013 12:32 PM
Hello all, and thanks for your time reading (& hopefuly replying) to this!
Lets first start with a run down of my credit as it is today....
To get down to 30%
30% = 660
100% or 41%??
Aside from college, I work cash (about 1,000mo,) but manage it very well, as my credit card payments are basically my rent.
Never missed a payment in 7 years on anything...
What I'm trying to do first, then 3 questions if you would....
In 2008, the bank said I had not the credit yet for a house (even though it would have been 1/2 my rent) so using my credit cards I built a nice house our my family's farm. (So I dont own the land it is on.) I've been busy paying my credit off, less the car but I needed it & kept it very affordable.
I want to buy land, for <30,000, so I can start making some payments and years form now build on it. I really want to be making payments on some land by fall.
To start this, in December I opened a savings account at a local bank in the area where I wish to buy, with $500, and I've been / plan to continue to put $200 a month into the account. This way the local bank gets to "know me" as a customer.
Aside from paying well over on the cards each month, and the $200mo to the savings acct, I figure I can pick up the pass and bring in an extra $3000 by mid summer.
Questions if you please...
1. I plan to drop this extra $3,000 = $2000 to savings acct, $1000 in the safe. This way I have cash if need be so savings never drops, but also have a decent down payment when time comes. (my goal is a $5000 in savings for a down payment.) My goal is to get this loan for land by fall, is this the best action?
2. I've been considering a lower interest installment loan to pay my credit cards down to 10%. Is this a good idea in regards to my credit score?
3. Rather than paying over equally on my 3 credit cards, is it better to pay more towards that which is lower interest & closer to the 30% usage line, or pay more towards higher interest card that is nearly full? I know in the long run which to do (the higher) but I ask this in regards boosting my credit?
THANK YOU TO WHOEVER REPLIES IN ADVANCE!!!
01-27-2013 12:14 PM
Ok, so I just looked at big Chase, the bill shows new balance 3309, and total credit line 7600. but on my credit report it say closed by customer... does this mean FICO is caculating this at 100% usage ratio or 43%?
01-27-2013 12:48 PM
1) Nothing wrong with saving $$$.
2) I wouldn't get a consolidation loan. It'll bump up your DTI and lower the odds of approval for the land. I'd just pay down the CCs sooner rather than later via regular payments.
3) Score-wise, you would be better paying off the lowest balance CCs first.
Your Chase is at 43%. Closed CCs factor into util just like opened ones. Once the balance goes to $0, then FICO will forever ignore the balance and CL which can increase your util on your other revolving accts if you are carrying balances on them.
01-27-2013 01:03 PM
Thanks for the fast reply!
As to your statement on the closed Chase CC....
Does FICO see that card as being at 41% or 100%? Again, we opted out when the credit crunch sweapt through.
If FICO see it as 100%, should I worry in fear about paying it to 0 in a hurry, or just worry about paying off little Chase, then closed big Chase, then discover?
This is all very confusing...
I could afford to take that extra $3000, bring both Chases down to 30% & still add my planned $2000 to the saving account for the down payment.
01-27-2013 03:31 PM
Any closed CC w/ a balance is factored in just like any opened CC. It fully factors into CC util using the current balance and the reported CL. Once that balance goes to $0, then it is forever removed from util calcs. So, it's at 41% until you pay it to $0 then FICO will ignore the CL and the $0 bal.
01-27-2013 04:16 PM - edited 01-27-2013 04:19 PM
After hours of research I think I know what you mean....
On the Big Chase that we opted out on:
We should pay it down, but not pay it off as it contributes in a positive fashion to our util, right?
AFTER HOURS on here reading and other stes, I have finally decided to use that $3000 to pay both chases down to 11% and hold them there, continue to put $200 a month into the savings account for good faith with the bank, and use my chase monthly payments to go with discover. If I play my cards right, in october I should be looking like this:
Discover 2500/6600 = 37%
Lil Chase 250/2200 = 11% (holding there)
Big Chase 800/7600 = 10.5% (holding there) -Might Opt-In with the higher interest rate at that point...
* all together 3550/16,400 = 21.4%
All this for a <30,000 loan for land!
I will be able to do this much by using "$2500ish" in fed student loans towards this mess, but they have better interest rates, and are installment loans rather than credit....
(holding there) on Chases as I've read that one wants to keep their Utilz from 10% to %30, as under 10% can cost a few points.
Thanks for the replies MOD!