Rebuilding Newbie... Advice Needed

Anonymous · ‎01-07-2015

I have committed myself to rebuilding my credit. As of today, I have a score 576 (ouch).

My debts consists of student loans, 2 regular cards, 2 secured cards, and a myriad of store charge cards.

USAA BANK SEC MASTERCARD 1308/1300 $25

USAA BANK SEC AMEX 408/400 $14

*CREDIT ONE BANK UNSEC 617/600 $31

*(will charge a $9 monthly fee even if my balance is $0)

CAPTIAL ONE UNSEC 297/300 $25

GINNY'S 870/1000 $35

WW 481/500 $20

OSP 194/250 $20

JL 236/250 $20

MS 266/400 $30

MW 280/400 $20

CW 0/250

RMN 0/250

MV 0/900

I am current on all, but am only able to pay the minimum each month (could probably 5 or 10 dollars more on a few if I buckled down more). I plan apply my tax return (approx $2000) toward my credit card debt. As shown, almost all of my accounts are at or about 99%. I'm wondering how to get the biggest credit improvement bang for my buck. Should I pay off as many of the smaller accounts as possible, then apply (most of) the savings toward the next larger bill? Or pay some on all to get closer to the 30% mark. Or should I be doing something all together different?

Anonymous · ‎01-07-2015

I would suggest immediately paying:

Credit one: PIF $617 and close the account.

Ginny's: PIF $870

MS: PIF $266

Cap 1 : PIF $297

Total: $2050

This frees up $120 each month. Next month apply it all to OSP plus the $20 you would normally pay and it should be down to ~$30 or so left. So the next month you have ~$110 left over after paying the balance of the OSP - continue applying everything you free up to the next account with the lowest balance (debt snowball), and you should be able to easily pay all but one or two off by the end of the year. By the time you get to the biggest one (USAA $1308), you will have freed up $200 in payments and that one will fall quickly. It takes discipline and sticking to your budget, but it can be done. After 12 more months of on time payments and getting your UTI under control, your score should see a nice jump and you may qualify for unsecured cards to replace those secured ones.

The Credit One account is simply not worth the outrageous fees they charge once you have several accounts established. These CC's should only be kept open for 6-12 months in order to 'jump start' a weak credit profile.

Also keep working on any derogs in your files.

Anonymous · ‎01-07-2015

I would also add, worry less about getting 'bang for the buck' with regards to scores, and more about getting 'bang for the buck' with regards to reducing your debt load as quickly as possible. The score will come up with the debt load elimination at the end of the process - what it does in between then and now is not important. Keep in mind this a 12-24 month process - a marathon, not a series of monthly sprints.

Anonymous · ‎01-07-2015

Thanks for responding. One question: do I close the other cards as I get them paid off or keep them open with a $0 balance.

Anonymous · ‎01-08-2015

I would only close them if they have annual fees.

Anonymous · ‎01-08-2015

GINNY'S 870/1000 $35

MS 266/400 $30

CAPTIAL ONE UNSEC 297/300 $25

CREDIT ONE BANK UNSEC 617/600 $31

By Paying these cards off with your 2000 tax return your total monthly credit card payments will amount to 119 a month. You are now paying 240 a month. This would be the best option to help your credit and pocketbook.