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Credit Score - Credit Card Utilization

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TrueGeminiNC
Frequent Contributor

Credit Score - Credit Card Utilization

HI All,

 

It has been a while since I have been here. This week, I experienced a 20 point FICO score drop which I am now working diligently to address.  The point change is a result of high credit card utilization.  Long story short – the public schools are continuing to deteriorate and without access to public charter schools, private school is my only option. 

 

I have obtained a 3-year loan and I plan to utilize the proceeds to pay down my credit card debt to raise my score.  Unfortunately, the loan amount isn’t enough to pay all of my accounts in full.  As such, I am here to solicit advice. 

 

I have gone back and forth on if I should pay my AMEX charge card in full or not.  I have been carrying a balance for approx. 5 months now and the minimum payment is upwards of $600.00 each month.  Financially, it would be difficult to continue making the min $600.00 monthly payment (AMEX) coupled with the new loan payment so I have to find a balance.

 

The PMT column reflects how I am considering spreading the loan proceeds across each account.

 

What are your recommendations as far as addressing my utilization to raise my score?  Also, how long do you think it will take for me to pick back up the 20 points once my utilization begins to decrease. 

 

Screen Shot 2016-03-18 at 22.00.01.png

Message 1 of 11
10 REPLIES 10
NRB525
Super Contributor

Re: Credit Score - Credit Card Utilization

First round of questions:

 

Check on line on your Discover account. Do you have the two BT offers, 0% for a 3% fee and 12 months, and an offer for no BT Fee, 4.99% and 18 months?

When was your last Discover CLI? Don't request one yet, there's another set of questions and suggestions coming, just note when your last Discover CLI was.

 

What is the APR on this new 3 year loan? What is the loan amount? Who is the lender?

 

2016 Feb Discover BT Offer.JPG

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
April 2022 EQ=811 TU=807 EX=805 - TU VS 3.0 765
Message 2 of 11
SouthJamaica
Mega Contributor

Re: Credit Score - Credit Card Utilization


@TrueGeminiNC wrote:

HI All,

 

It has been a while since I have been here. This week, I experienced a 20 point FICO score drop which I am now working diligently to address.  The point change is a result of high credit card utilization.  Long story short – the public schools are continuing to deteriorate and without access to public charter schools, private school is my only option. 

 

I have obtained a 3-year loan and I plan to utilize the proceeds to pay down my credit card debt to raise my score.  Unfortunately, the loan amount isn’t enough to pay all of my accounts in full.  As such, I am here to solicit advice. 

 

I have gone back and forth on if I should pay my AMEX charge card in full or not.  I have been carrying a balance for approx. 5 months now and the minimum payment is upwards of $600.00 each month.  Financially, it would be difficult to continue making the min $600.00 monthly payment (AMEX) coupled with the new loan payment so I have to find a balance.

 

The PMT column reflects how I am considering spreading the loan proceeds across each account.

 

What are your recommendations as far as addressing my utilization to raise my score?  Also, how long do you think it will take for me to pick back up the 20 points once my utilization begins to decrease. 

 

Screen Shot 2016-03-18 at 22.00.01.png


I know this is not responsive to your question, and i apologize in advance for being annoying, but:

1. private school is not an option for those who don't have the money

2. i am a parent and know how you feel, but there's just so much you can do for your kids; you can only do your best with what you've got

3. you are head over heels in debt and need to stop; that is your only solution

4. you should not be focusing on points, right now, but should concentrate on getting out of debt

my advice is to

1. take your kids out of private school

2. with the loan proceeds pay all your credit cards down to 29% or lower

3. then concentrate on getting the majority of them down to zero

4. your score is going to get worse with the new loan, and will suck until you get that loan at least partially paid down

5. you should stop using cards or borrowing until you get things under control

it doesn't do your kids any good to have a parent who is in despair over debt, but that's where you're going to wind up

the main school kids attend is their home

the main teachers kids have are their parents


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 3 of 11
Anonymous
Not applicable

Re: Credit Score - Credit Card Utilization


@TrueGeminiNC wrote:

HI All,

 

It has been a while since I have been here. This week, I experienced a 20 point FICO score drop which I am now working diligently to address.  The point change is a result of high credit card utilization.  Long story short – the public schools are continuing to deteriorate and without access to public charter schools, private school is my only option. 

 

I have obtained a 3-year loan and I plan to utilize the proceeds to pay down my credit card debt to raise my score.  Unfortunately, the loan amount isn’t enough to pay all of my accounts in full.  As such, I am here to solicit advice. 

 

I have gone back and forth on if I should pay my AMEX charge card in full or not.  I have been carrying a balance for approx. 5 months now and the minimum payment is upwards of $600.00 each month.  Financially, it would be difficult to continue making the min $600.00 monthly payment (AMEX) coupled with the new loan payment so I have to find a balance.

 

The PMT column reflects how I am considering spreading the loan proceeds across each account.

 

What are your recommendations as far as addressing my utilization to raise my score?  Also, how long do you think it will take for me to pick back up the 20 points once my utilization begins to decrease. 

 

Screen Shot 2016-03-18 at 22.00.01.png


I agree with the others about not taking on more debt, you will get yourself in a very difficult situation.

 

I also would suggest being far more focused on fixing the overall debt issue rather than focusing on raising your score. Taking on more debt to pay debt is not a good idea.

 

Homeschooling is an excellent option and I know many parents who do so while working (and going to graduate school - I homeschooled my daughter while I was in graduate school). There may also be outstanding fine arts, astronomy and science classes and groups that your children may find within your community or a nearby community in addition. Best of luck to you.

Message 4 of 11
NRB525
Super Contributor

Re: Credit Score - Credit Card Utilization

So, my suggestion is to use the new loan only to pay off the Discover, the BOA, and the Citi LOC. This puts about $16,000 on the new loan.

By paying off Discover and BOA, you open those CL up to use the available BT offers that should be readily availble from BOA and Discover.

 

BOA will likely charge a 4% fee, but the 0% is good for 18 months.

The Discover $0 Fee 4.99% offer should be considered, because you will want to pay this down fast, and it will open up the Discover card later for another BT to Discover.

 

Don't pay down the Citi TY Premier, that rate is one of the lowest you have, so it should be used where it is. No new charges on this card obviously.

Use the AMEX Delta and PRG for daily expenses, and no other cards, but pay in full every darn month. No more balances on these cards!

 

Credit Payoff Suggestion March 2016.JPG

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
April 2022 EQ=811 TU=807 EX=805 - TU VS 3.0 765
Message 5 of 11
TrueGeminiNC
Frequent Contributor

Re: Credit Score - Credit Card Utilization


@SouthJamaica wrote:

@TrueGeminiNC wrote:

HI All,

 

It has been a while since I have been here. This week, I experienced a 20 point FICO score drop which I am now working diligently to address.  The point change is a result of high credit card utilization.  Long story short – the public schools are continuing to deteriorate and without access to public charter schools, private school is my only option. 

 

I have obtained a 3-year loan and I plan to utilize the proceeds to pay down my credit card debt to raise my score.  Unfortunately, the loan amount isn’t enough to pay all of my accounts in full.  As such, I am here to solicit advice. 

 

I have gone back and forth on if I should pay my AMEX charge card in full or not.  I have been carrying a balance for approx. 5 months now and the minimum payment is upwards of $600.00 each month.  Financially, it would be difficult to continue making the min $600.00 monthly payment (AMEX) coupled with the new loan payment so I have to find a balance.

 

The PMT column reflects how I am considering spreading the loan proceeds across each account.

 

What are your recommendations as far as addressing my utilization to raise my score?  Also, how long do you think it will take for me to pick back up the 20 points once my utilization begins to decrease. 

 

Screen Shot 2016-03-18 at 22.00.01.png


I know this is not responsive to your question, and i apologize in advance for being annoying, but:

1. private school is not an option for those who don't have the money

2. i am a parent and know how you feel, but there's just so much you can do for your kids; you can only do your best with what you've got

3. you are head over heels in debt and need to stop; that is your only solution

4. you should not be focusing on points, right now, but should concentrate on getting out of debt

my advice is to

1. take your kids out of private school

2. with the loan proceeds pay all your credit cards down to 29% or lower

3. then concentrate on getting the majority of them down to zero

4. your score is going to get worse with the new loan, and will suck until you get that loan at least partially paid down

5. you should stop using cards or borrowing until you get things under control

it doesn't do your kids any good to have a parent who is in despair over debt, but that's where you're going to wind up

the main school kids attend is their home

the main teachers kids have are their parents


 

Thanks for the concern.  However, removing the kids from private school is not an option.  There are alot more things that I can do to reduce my debt e.g. creating a budget and sticking to it.  There are many areas where I can cut back such as travel ($600 monthly), food & dinning (900 monthly), Entertainment (350 monthly), Shopping (800 monthly), etc.  Also, the lease is set to expire on my car this year which also creates an opportunity if I so choose to lease a less expensive car.  

 

I should also mention that I have access to cash that I have socked away for emergencies.  

 

Honestly, I have just gotten lazy/sloopy with financial management oversight.  Seeing the big point drop was a wake up call.  I have spent a good part of today drafting a budget and based on my projections, I will be able to significantly reduce my debt load in 12 - 18 months.  I can shorten this time if I decide to use my savings.  

 

Overall, my concern for increasing my credit score over reducing debt is based on the premise of having sufficient income.  Again, I just need to re-focus my efforts and become more prudent with my finances.

Message 6 of 11
TrueGeminiNC
Frequent Contributor

Re: Credit Score - Credit Card Utilization


@NRB525 wrote:

So, my suggestion is to use the new loan only to pay off the Discover, the BOA, and the Citi LOC. This puts about $16,000 on the new loan.

By paying off Discover and BOA, you open those CL up to use the available BT offers that should be readily availble from BOA and Discover.

 

BOA will likely charge a 4% fee, but the 0% is good for 18 months.

The Discover $0 Fee 4.99% offer should be considered, because you will want to pay this down fast, and it will open up the Discover card later for another BT to Discover.

 

Don't pay down the Citi TY Premier, that rate is one of the lowest you have, so it should be used where it is. No new charges on this card obviously.

Use the AMEX Delta and PRG for daily expenses, and no other cards, but pay in full every darn month. No more balances on these cards!

 

Credit Payoff Suggestion March 2016.JPG


@NRB525 - thanks for this.  This is what I was looking for to help me re-build my score.  Everyone knows - a strong credit score is king these days.  As I shared in a previous response - I have just gotten sloppy/lazy with my finances.  I have sufficient income, however - I just need to cut back in areas that are now considered excessive when coupled with private school expenses.    

 

I also have cash in savings that I can play with.  I built a strong cash cusion after seeing so many of my friends loose their jobs.  And too - I can free up additional cash by temp. reducing my double digit 401K contribution in addition to other post-tax investment accounts.  

Message 7 of 11
TrueGeminiNC
Frequent Contributor

Re: Credit Score - Credit Card Utilization


@NRB525 wrote:

First round of questions:

 

Check on line on your Discover account. Do you have the two BT offers, 0% for a 3% fee and 12 months, and an offer for no BT Fee, 4.99% and 18 months?

When was your last Discover CLI? Don't request one yet, there's another set of questions and suggestions coming, just note when your last Discover CLI was.

 

What is the APR on this new 3 year loan? What is the loan amount? Who is the lender?

 

2016 Feb Discover BT Offer.JPG


 

@NRB525 - my last Discover CLI was probably about a year ago.  The new loan is with my credit union.  The rate for 15K (max debt consolidation loan amount) is 8.99%.  I am also considering pledging 5 - 10K of my savings account as collateral to increase this amount. 

 

I am taking time this weekend to really focus on reducing my debt load.  On the surface things do look terrible.  But, when I consider income + savings vs. wasteful spending - things aren't so bad.  Hence why my initial inquiry was focused on rebuilding my score vs. paying down debt.  

 

I also have the option to stretch the loan out for 5 years.  But, I made the concious decion of 3 years.  I am scheduled to meet with the loan officer at my credit union on Monday to discuss my final strategy and if I wante to take advantage of the option to pledge money in savings to increase the loan amount.

 

 

Message 8 of 11
manyquestions
Established Contributor

Re: Credit Score - Credit Card Utilization


TrueGeminiNC wrote: 

What are your recommendations as far as addressing my utilization to raise my score?  Also, how long do you think it will take for me to pick back up the 20 points once my utilization begins to decrease. 

 


 


There are alot more things that I can do to reduce my debt e.g. creating a budget and sticking to it.  There are many areas where I can cut back such as travel ($600 monthly), food & dinning (900 monthly), Entertainment (350 monthly), Shopping (800 monthly), etc.  Also, the lease is set to expire on my car this year which also creates an opportunity if I so choose to lease a less expensive car.  

I should also mention that I have access to cash that I have socked away for emergencies.  


If it was me, I'd cut all the expenses you listed above until you completely payoff all the cards.   If you can't pay them off now I agree with the strategy of paying off the Discover and BOA completely and hoping for 0% BT offers from them. I wouldn't pay all that interest if I had money in savings unless the savings was earning a higher return than the interest rates on the cards.

Message 9 of 11
TrueGeminiNC
Frequent Contributor

Re: Credit Score - Credit Card Utilization


@manyquestions wrote:

TrueGeminiNC wrote: 

What are your recommendations as far as addressing my utilization to raise my score?  Also, how long do you think it will take for me to pick back up the 20 points once my utilization begins to decrease. 

 


 


There are alot more things that I can do to reduce my debt e.g. creating a budget and sticking to it.  There are many areas where I can cut back such as travel ($600 monthly), food & dinning (900 monthly), Entertainment (350 monthly), Shopping (800 monthly), etc.  Also, the lease is set to expire on my car this year which also creates an opportunity if I so choose to lease a less expensive car.  

I should also mention that I have access to cash that I have socked away for emergencies.  


If it was me, I'd cut all the expenses you listed above until you completely payoff all the cards.   If you can't pay them off now I agree with the strategy of paying off the Discover and BOA completely and hoping for 0% BT offers from them. I wouldn't pay all that interest is I had money in savings unless the savings was earning a higher return than the interest rates on the cards.


 

No - the savings accounts are not yielding huge returns.  But as a single father - it is just added comfort knowing that in the event something happens unexpectedly - i have a good cash cushion.  Also, with my re-newed focus on my financial picture - I have analyzed the interest amounts that I am paying for carying balances.  I agree - the amount is high and will be addressed.  But, as previously mentioned I am comfortable with some degree of interest expense to avoid depleting my savings.  I simply have to find a balance and rationalize my decion to maintain a strong savings coupled wiht the desire to reduce my debts quickly.  


Thanks for your recommendations.  This has been very useful in helping me shape my strategy.

 

 

Message 10 of 11
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