What is going to happen

Anonymous · ‎10-14-2010

I have 5 terribly full credit cards 85% - 90% full; caring unbelievably 19 000 $ debt on them

I have Car loan last five years

I have US Unsecured personal loan.

I am on mission to go out of debt in five years and still believe I can do it

I pulled my scores last month: Exuifax and the other were 639 and 655. I was denied for Wells Fargo unsecured loan on 25 000 that I apply.

Even though, it will be smart to take care of credit cards first of course, I was pushing my car loan and personal loan to pay them off, since monthly they are 411$ and 335$.

I am paying off my car this month ( 6 months earlier) and one credit card is only 300$ balance and it is going to be paid off as well this month; and I am paying personal loan off in 45 days; which is going to left me with 19 000 $ debt on cards. What is going to happen with my Fico? What is going to happen with my score? Any clue? Should I try to apply for loan, to collect cards on one place again? Thanks everybody

Anonymous · ‎10-14-2010

Just to be clear. When I pulled up my scores; i was at:

3000 $ left for car

2700 $ for personal loan.

And my credit card of 300$ limit was 295$ full. Now will be 0 on that card.

Is it wort to try to go to local Credit Union and apply for loan even i am not a member?I am desperate to collect this to one place and to burn my cc on special celebration

Travis-84 · ‎10-14-2010

Paying off a credit line such as a car does not help you as much as paying off revolving credit, such as credit cards.

The best strategy would be to pay the mininums on every credit card, except the one with the highest interest rate. Then with the extra money you have, put that towards the credit card with the highest interest rate. When that card is paid off, move to the one with the second highest interst rate. This will let you increase your score the fastest, and pay as little interest as possible.

You made it sound like you have about 6 grand to pay off debt in the next 45 days? If so, put it all to your highest interst credit card. Assuming 5200 goes to credit cards (since you still have 2 car payments to make), your utilitazion just went from 90% to 65%. That should help your FICO score more than anything else.

At this point (and give it a month for the payment to be reflected), I would apply for a personal loan for the remaning credit cards balances. This will get them at a lower interst rate, and speed up the rate at which you pay them off, as long as you have the discipline not to charge them up again.

RobertEG · ‎10-14-2010

From what you have posted, my priorties would probably be different.

I would presume, with the high % util on your CCs, that your inerest rate on those cards is probably higher than that on your installment loans.

With a current revolving debt of $19K, and assuming an average yeartly interest rate on these cards of 24%, that is approx 2% per month.

That would result in a monthly interest outlay of approx $380 per month. So $380 a month is outlayed before there is any balance reduction on these cards.

% util on installment loans is minimal in FICO scoring when compared to % util of revolving credit cards.

I would pay min monthly on the installment loans, and put all above that into paying the revolving debt.

No CU will consider you for a loan if you are not a member.

Anonymous · ‎10-14-2010

Thanks guys for your reply. I was not clear; two months ago I was at 6 grand left for car and personal loan. Now it is only 800$ left for car and 1400 for loan. I understand, what you are talking about; but at this moment my concern was to take out big payments first. From November, I have no car anymore ( 450$ extra , and putting that for loan, he is going as well in December ( 350$) . That will aloud me in January to put 800$ extra on cards.

And at that point, I will try to do what you suggest, to start from cc with highest percentage. Or should I try to apply for loan and put all debts on one place. And of course take out cards from my wallet and mind , that they exist at all.What kind of chance do i have , after I showed them that I paid off two loans since I was declined for Wells Fargo loan?

Thanks.

RobertEG · ‎10-14-2010

I understand, iztok. Payment strategy is totally personal, based on anyone's personal needs.

All we can offer are recommended financial or FICO impacts on your payment plan. These can often be conttradicotory even between those to stategies.

Add on to that personal views of wanting to first delete the higher requried min monthly payments, and ultimately, the choice is individual.

I think your strategy makes sense for you, and if it works for you, then it is best for you!

Best of luck!

Travis-84 · ‎10-15-2010

As for your odds of getting approved, it depends on your credit score. If you were denied recently by Wells fargo, your credit score probably hasn't gone up too much, but everybody has different underwriting guidelines. You could also print off your credit report (with score), and take it to your credit union. They might be willing to talk to you, and give you your odds of approval, and probably interst rates without having to run your score.

That way if somebody declines you, you don't have an inquiry on your report. Now, before they offically approve you, they will run your credit report,.