Reply
New Visitor
Posts: 1
Registered: ‎07-28-2007
0

Strategy in paying off credit

Question regarding how to pay down credit cards.
I'm building a house and the builder ran out of money.
Because it is a construction loan, there is significant $$ in equity but I cannot tap into it until the project is completed with an occupancy permit in hand.
I have been paying him out of pocket to get the project finished.
As such, I charged many credit cards up to the 90% - 95% level.
My score dropped from 755 down to 675 = 80 points in 6 months due to this activity over time.
I now have some cash and want to pay the cards down. Should I pay off a select few, or pay them all down to a lower loan to available credit ratio?   (Ex.  In lieu of 90% of available credit, down to 70%).  Further, what are the trigger points? I know if you are below 50% of LTV, it is a score adjuster at the 49% mark. What are the other trigger points? 79% or 69%?  Hoping this makes sense and would greatly appreciate any input.
New Member
Posts: 4
Registered: ‎07-13-2007
0

Re: Strategy in paying off credit

90% 72% 50% 34% 25% 9%
Bad ----------> Good


Rough estimates!
Moderator Emeritus
Posts: 9,252
Registered: ‎03-19-2007
0

Re: Strategy in paying off credit



tpmcCalifornia wrote:
Question regarding how to pay down credit cards.
I'm building a house and the builder ran out of money.
Because it is a construction loan, there is significant $$ in equity but I cannot tap into it until the project is completed with an occupancy permit in hand.
I have been paying him out of pocket to get the project finished.
As such, I charged many credit cards up to the 90% - 95% level.
My score dropped from 755 down to 675 = 80 points in 6 months due to this activity over time.
I now have some cash and want to pay the cards down. Should I pay off a select few, or pay them all down to a lower loan to available credit ratio? (Ex. In lieu of 90% of available credit, down to 70%). Further, what are the trigger points? I know if you are below 50% of LTV, it is a score adjuster at the 49% mark. What are the other trigger points? 79% or 69%? Hoping this makes sense and would greatly appreciate any input.





Put in all into an Excel worksheet and create a plan.

Paying highest APR= save $

The break points in UTL are at 50% 30% and less than 10%
Remember that Fico takes both total UTL and Individual UTL into the score.
Contributor
Posts: 76
Registered: ‎06-30-2007
0

Re: Strategy in paying off credit

IF you believe the FICO score simulator, your score will actually rise about 20-30 points MORE if you pay them down slowly over the course of 6 months, vs. paying them down all at once. At least that's what it does for me (when I run the score simulator, put in what happens if I pay X of my revolving debt. vs what happens if I pay X amount/month for X months.)
Finally made it to 813
Moderator Emeritus
Posts: 16,374
Registered: ‎03-12-2007
0

Re: Strategy in paying off credit



m_jonis wrote:
IF you believe the FICO score simulator, your score will actually rise about 20-30 points MORE if you pay them down slowly over the course of 6 months, vs. paying them down all at once. At least that's what it does for me (when I run the score simulator, put in what happens if I pay X of my revolving debt. vs what happens if I pay X amount/month for X months.)

The score simulator is highly inaccurate. It's far better to pay down the balances quickly.
Credit Profile -
FICO 08 Scores (03-26-2015): EQ 814, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26 years ~ AAoA: 13 years ~ Util: 1% ~ Inqs: EX 1, EQ 1

Credit Cards: Amex BCP ~ Amex Clear ~ Amex Platinum ~ Barclay Ring Mastercard ~ Chase Freedom Visa ~ CITI Dividend Platinum World Mastercard ~ FIA Fidelity Investment Platinum Visa ~ First Hawaiian Bank Gold Visa
Super Contributor
Posts: 8,177
Registered: ‎03-25-2007
0

Re: Strategy in paying off credit

The reason the score simulator "prefers" paying over 6 months is that it also adds in 6 months ageing and assumes perfect payment during this tim,e.
 
Paying off at once and waiting 6 months will be better  :smileyhappy:
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Moderator Emeritus
Posts: 16,374
Registered: ‎03-12-2007
0

Re: Strategy in paying off credit



MidnightVoice wrote:
The reason the score simulator "prefers" paying over 6 months is that it also adds in 6 months ageing and assumes perfect payment during this tim,e.
 
Paying off at once and waiting 6 months will be better  :smileyhappy:


Agreed!
Credit Profile -
FICO 08 Scores (03-26-2015): EQ 814, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26 years ~ AAoA: 13 years ~ Util: 1% ~ Inqs: EX 1, EQ 1

Credit Cards: Amex BCP ~ Amex Clear ~ Amex Platinum ~ Barclay Ring Mastercard ~ Chase Freedom Visa ~ CITI Dividend Platinum World Mastercard ~ FIA Fidelity Investment Platinum Visa ~ First Hawaiian Bank Gold Visa
Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.