Paying down Credit Card Balances

[lindel]

I have 32 credit cards, out if all my cards 14 have balance. I was told by the mortgage lender to get all cards under 30%. Because right now my mortgage score is sitting at 620. I know on the forum it says to pay all the cards to 0, then have one card reporting 10% utilization or less. What if I paid all the cards down anywhere from 10-30%. How would that affect my score? Also 2 of the credit cards are secured, they are not my oldest card. If I closed one of them, Do you think it will drop my score? Thanks in advance!

[Anonymous]

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@lindel wrote:
I have 32 credit cards, out if all my cards 14 have balance. I was told by the mortgage lender to get all cards under 30%. Because right now my mortgage score is sitting at 620. I know on the forum it says to pay all the cards to 0, then have one card reporting 10% utilization or less. What if I paid all the cards down anywhere from 10-30%. How would that affect my score? Also 2 of the credit cards are secured, they are not my oldest card. If I closed one of them, Do you think it will drop my score? Thanks in advance!

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Impossible to tell what exact effect it woud have on your scores.  Far too many variables to know but the lower your overall utilization, the better and your scores will go up.

Closing the secured card wont change your score at all.

[lindel]

Thanks! I was hoping it wouldn't. I could use that money from the secured card to pay down my other cards

[Anonymous]

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@lindel wrote:
Thanks! I was hoping it wouldn't. I could use that money from the secured card to pay down my other cards

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Sounds like a good plan and good luck with the mortgage.

[NRB525]

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@lindel wrote:
I have 32 credit cards, out if all my cards 14 have balance. I was told by the mortgage lender to get all cards under 30%. Because right now my mortgage score is sitting at 620. I know on the forum it says to pay all the cards to 0, then have one card reporting 10% utilization or less. What if I paid all the cards down anywhere from 10-30%. How would that affect my score? Also 2 of the credit cards are secured, they are not my oldest card. If I closed one of them, Do you think it will drop my score? Thanks in advance!

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So, you have 21 cards in your siggy, which implies you have 11 other cards not listed?

Which card is the secured card, because you don't have that many "real" credit cards yet. Most of them are store cards.

Are you carrying balances on the store cards? If so, interest costs are Ouch right now.

NFCU is your secured card? No, don't close that. Don't close it until you transition either with a new app or graduating this card ( not sure that's possible, but it might be ) to a regular NFCU credit card.  That money looks interesting, to free up that for payment, but you should continue to build your NFCU relationship, in my opinion.

Which of your store cards can you close?

[lindel]

You are right. It was a typo. It should have said 22. I got all my cards between March and July 2015. Half have 0 balance. I just hoping to close my secured card to free up the money to pay off my balances. I don't won't to close a lot of cards because I don't want my score to drop.

[Anonymous]

Having 14 different cards with balances also gives you a much higher DTI, which the lender will be looking at as well.

I really encourage you to take the time to pay off all your credit card debt (much of which is high interest, as NRB points out) -- and do this before you try to buy a house.  If you were to do that first, you could also then close several of your junk cards, which may be causing you to pay higher auto insurance premiums.

[NRB525]

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@lindel wrote:
You are right. It was a typo. It should have said 22. I got all my cards between March and July 2015. Half have 0 balance. I just hoping to close my secured card to free up the money to pay off my balances. I don't won't to close a lot of cards because I don't want my score to drop.

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The thing is, though, if your NFCU Secured card was your last card in July, you already are nearly 6 months into earning a real CC from NFCU. That history is getting you closer to your next app with NFCU, which may be in a few months yet, but is close. That unsecured NFCU card should do wonders for your utilization ratio. Don't give up yet!

In hindsight, the apps in March - July should have been many fewer. Those are likely one of the factors hindering your mortgage score now: Many new accounts. Nothing you can do about it now, just work on paying them off to avoid the interest costs, and help utilization.

Once you get utilization down, you won't see an effect from closing the store cards, so look forward to that.