05-01-2012 02:13 PM
I did my FICO score again today via myFICO and scored a 738 on TU and 710 on Equifax. I know that everyone may assume why is this one wasting our time but I have a question. I tried to do the simulator but got confused. So I am asking for assistance.
Here are my credit cards: balance, limit and interest rate.
Bank of Amer 1,600.93 Limit 4,600 15.99%
Chase 6,303.26 Limit 11,000 13.24%
Citi 1614.83 Limit 4,300 8.24%
CapOne 0.00 Limit 4,100 22.90%
Discover 4,377.45 Limit 8,000 24.99% (just got it lowered to 3.9%)
Target 975.73 Limit 1,000 22.90%
Question: should I focus on paying off the higher interest rate ones first. I am trying to fix my score to purchase a home. I was told by the bank it was too low. When I asked my bank today for assistance, they told me to have my stuff close to 25% of the limit.
besides purchasing the 3 credit bureau checks, what other products would you reccomend as I am serious about paying off my debts.
Thank you for your assistance!!
05-01-2012 05:56 PM
Their are two different scenarios for paying down CC debt, often at odds to one another.
From a financial point of view, it makes sense to pay the higher interest cards first.
From a FICO point of view, it makes no difference in overall % util, but might make a big difference in the scoring of the combined effects of the % util of your individual cards.
The scoring of %util of individual cards penalizes higher % utils to a greater extent, so paying down the higher util, particulary the near-maxed, cards is the way to go.
It depends on your immediate goals. If increasing FICO score is the predominant issue, then the higher %util cards would be the first focus.
05-01-2012 06:11 PM
Also, You will likely benefit from having more accounts report a $0 balance. You also want all accounts below 79% utilization. That lines up pretty well with the two highest interest rate cards, one of which is maxed out (Target). Pay off Target and BofA.
05-02-2012 08:44 AM - edited 05-02-2012 08:45 AM
I see you just had one card lowered to 3.9%. Can you transfer balances to it and pay it down more aggressively and more quickly?
Unfortunately, with your high utlilization, it may be hard to get a long term 0% card like the Citi Diamond Preferred, which would allow you 18 months at 0% to pay down debt.
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