topic Re: Open CC to pay off debt in Credit Cards

Open CC to pay off debt

Anonymous — Thu, 16 Jun 2016 13:48:41 GMT

My fiancé is trying to buy a house with the VA. He was told if he pays off a $8000 debt in full he will be qualified. I really want to help out since we are in a rough neighborhood currently. We have been together for 5 years, so I'm not just helping a new boyfriend We have a 2 year old and I want out of this place. I am trying to figure out how I can find out if I will be able to qualify for enough credit, and if there are any cards that have 0% interest for a period of time. I have a $2000 balance from a 24% card I would love to transfer. Does a 0% intro APR mean 0% interest?? Chase Freedom Unlimited card has that on their details.

Re: Open CC to pay off debt

takeshi74 — Thu, 16 Jun 2016 14:27:23 GMT

APR is the interest rate, so yes.

Unfortunately there's no easy way to figure out what sort of limit you'd qualify for. You can look at your existing accounts and your credit profile to try to make an educated guess but that requires an understanding of how credit is assessed. On top of that, creditors and products don't all have idenitical underwriting criteria so what you'd qualify for can vary from one creditor to another and even from one product to another.

It's never just about score but you can refer to resources such as the Credit Pulls Database to determine the CRA and scoring model used in the decision for a given creditor/product and then go pull that specific score.

@Anonymous wrote:
I have a $2000 balance from a 24% card I would love to transfer.

Is this the only card you have? Is this the only credit account that you have? What's the revolving utilziation on that card? Revolving utilization is simply balance(s) / limit(s)/ Both the revovling utilization for each of your cards and your overall revolving utilization for all your cards matter. As an example, if that card has a $10,000 limit:

$2,000 / $10,000 = 20%

General advice is do not exceeed 30%. If you have hiigh revolving utilization then don't rely on opening a new account to solve your problem. The revolving utilization on the new card you intend to transfer to will matter as well. If you're looking to transfer your $2K balance and his $8K balance that's a total of $10K, Ideally you'd want a new card with a limit of at least $30K. If you can't do that then you'd need to pay down the revolving utilization as quickly as possible on the new card after transferring the balances.

However, it's impossible to tell you if you'd stand to get sufficient limits to transfer those balances without much more information. You may just need to pay down your debt. If you can give us a better idea of your credit profile we can provide feedback. Look at your credit reports and consider the FICO scoring factors:

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

How is your Payment History? Do you have any lates or derogs impacting Payment History?

What is your revolving utilization like?

How is your Average Age of Accounts? How many accounts, both closed and open are on your reports?

What's your mix of credit like? Do you only have revolving accounts (e.g. credit cards)? Do you have any installements (student loans, auto loans, mortgage, etc)?

For New Credit, how many new accounts (2 years or less) are on your reports? How many hard pulls/inquiries and how old are each of them?

I know that's a lot all at once but we would really need a lot more information to begin to attempt to respond.

Re: Open CC to pay off debt

Anonymous — Thu, 16 Jun 2016 14:35:20 GMT

For the best responses, tell us a bit more about your credit profile and you will get solid suggestions on how to proceed.

Re: Open CC to pay off debt

Anonymous — Thu, 16 Jun 2016 17:02:59 GMT

@Anonymous wrote:
For the best responses, tell us a bit more about your credit profile and you will get solid suggestions on how to proceed.

Yes...

Re: Open CC to pay off debt

Kevin86475391 — Thu, 16 Jun 2016 18:30:06 GMT

@takeshi74 wrote:
@Anonymous wrote:
I have a $2000 balance from a 24% card I would love to transfer.
Is this the only card you have? Is this the only credit account that you have? What's the revolving utilziation on that card? Revolving utilization is simply balance(s) / limit(s)/ Both the revovling utilization for each of your cards and your overall revolving utilization for all your cards matter. As an example, if that card has a $10,000 limit:
$2,000 / $10,000 = 20%

General advice is do not exceeed 30%. If you have hiigh revolving utilization then don't rely on opening a new account to solve your problem. The revolving utilization on the new card you intend to transfer to will matter as well. If you're looking to transfer your $2K balance and his $8K balance that's a total of $10K, Ideally you'd want a new card with a limit of at least $30K. If you can't do that then you'd need to pay down the revolving utilization as quickly as possible on the new card after transferring the balances.

For the most part I very much agree with all of Takeshi's points, except I do have a slightly different take on the above comment. All of that is very much true in general for maintaining good credit, but it sounds like the OP's personal priorities and situation may be different than strictly maintaining good credit (please correct me if I'm wrong).

You're not planning to be on the mortgage right, just your boyfriend? In that case your credit score isn't relevant to the mortgage, and while I would never actively encourage someone to max out a credit card and tank their scores, if getting the mortgage and getting into a safer neighborhood is your priority than that could certainly be extenuating circumstances.

Are you concerned with doing anything else with your credit in the near term like getting a car loan, personal loan, etc.? Hurting your score through utilization, and even triggering balance chasing AA (adverse action) can be a fairly short-term, correctable problem as long as you're able to pay off the balance while it's under the 0% terms. Missing a payment, having a late payment, or other derogatory accounts is much more serious and takes much longer to correct (often requiring you to wait 7 years for the bad stuff to age off). By contrast your utilization has no 'memory' component in the scoring; it's just whatever your utilization is in that moment. So if you have it at 80% for awhile, absolutely that's going to be terrible for your credit and may cause AA that could have other negative effects, but from a utilization standpoint the damage is completely erased once the balance is paid off.

So I would say focus on what makes the most financial sense in terms of actual cash dollars as well as what makes the most sense for your family. Sacrificing your credit score in the short term (in a way that is relatively easy to fix if you have funds) for the sake of helping your partner qualify for a mortgage and getting yourselves and child into a safer environment doesn't sound like the worst idea to me, especially if it's truly only affecting your score on paper and not costing you money.

Of course there are a lot of caveats like the security and stability of your relationship, whether or not you have any other solutions, and of course whether or not you will be able to pay the balance in full before the 0% terms expire (and remember your expenses are likely to rise with the purchase of a new home and as homeowners having a solid emergency fund in place becomes more important than ever. So make sure to budget for that and crunch the numbers).

Anyway, I realize that's not what you asked and all this is just a side point, but I'm just saying you may possibly feel justified in maxing out the new card if you can only get approved for around 10-12K or something instead of the 30K+ you'd need for maintaining good credit. It's a very important personal decision that you'll need to weigh in the larger context of your life.

Anyway, good luck with whatever your decide and I hope things work out!

Re: Open CC to pay off debt

RonM21 — Fri, 17 Jun 2016 00:14:21 GMT

I like the point that you want to make sure you do what makes the most financial sense and suits you personally. It can easily be overlooked.

Re: Open CC to pay off debt

Anonymous — Mon, 20 Jun 2016 23:02:05 GMT

Let's see, I have 4 credit cards. My utilization are 0%, 30%, 40%, and 70%. The 70% is what I want to transfer to the new card. $2200. I have fairly low APR on the other cards, but a 24.5% on the one I am transferring. I could easily knock that one out before the 15 months 0% is over. I am also paying off a student debt of only $800 with the credit card to avoid it going onto my credit report. It was apparently sold to collections in January but I haven't heard anything or seen it on my report.

My boyfriend wants to transfer a total of $14,000 to my card and I only have $23,000 limit with 0% interest. I don't plan on getting a personal loan nor a car loan so I am thinking if I do this and my score goes down a little, that it might be okay. I have never had any late payments so as long as I continue to pay on time my score should slowly go back up, right? I probably won't use my credit score for anything for a couple of years. I have the credit card if I really need anything. And thanks for understanding that I want to get into a better neighborhood. I hate to think my daughter will grow up here.

With that said, my boyfriend said if I transferred those two things and he paid roughly $800 a month, then we should be able to get a better house in February. I hate to wait that long, but I am sure the lender would see $14,000 miraculously disappear from his debt and question him.

Re: Open CC to pay off debt

Anonymous — Mon, 20 Jun 2016 23:06:19 GMT

** Finger hut (never used it), Care Credit, Victoria's Secret, Best Buy Mastercard, and now Chase Freedom Unlimited.

BTW, I got the $23,000 limit by using his income and my score. The gentlemen on the phone said it was okay to do. I wish home loans worked the same!

Oh, and right now he qualified for $145,000 but he wants more and said maybe by February with his debt:income being roughly 900:4300 he should get more.

Re: Open CC to pay off debt

Anonymous — Mon, 20 Jun 2016 23:16:45 GMT

I have a question. What if you were on the mortgage/loan as well? Would that help the approval odds?

The reason I ask is that right now I am suspicious of everyone. My cousin is just going through a nasty divoce right now where she will probably end up with very little. While she took on her share of the bills and debt, the property was in his name (including the house she inherited when her father died). I know every situation is different, so forgive me if this sounds rude, but loads of red flags pop up for me when I hear a plan in which one party wants another to take on debt so they can obtain assets.

Re: Open CC to pay off debt

Anonymous — Tue, 21 Jun 2016 17:23:38 GMT

I can't go on to the loan. I am self employed and haven't worked long enough to be put on it. Maybe about 8 months off and on. I calculated everything and with his debt plus mine, it would be about a 46% utilzation. I have $4400 debt, while he has the 14,000 he is adding to mine. I am sure my score will go down, but maybe not by much since right now it is at 72% (before the new $23,000 cc) and my score actually went up while having the utilization this high... Possibly because each account says no missed payments etc.

Re: Open CC to pay off debt

Anonymous — Tue, 21 Jun 2016 17:11:44 GMT

I really don't want to screw my credit up because around the age of 18-25 it was a 500 something, because there were 2 collection accounts from another state I had never been to saying I owed thousands for medical treatment.. I tried for years to get it removed but it just stayed on my account. The past 2-3 years it had went from 500 to 717. But then again, I won't be taking out any kind of auto or personal loan and won't be able to get a home loan for years because I don't have enough work history. I really want to make the best decision for my family. I'm just hoping he comes through and actually pays! I mean, I know he will pay but I am saying have it paid off by the 15 months 0% interest. Because that would be ideal.

Re: Open CC to pay off debt

CreditDunce — Tue, 21 Jun 2016 17:24:21 GMT

@Anonymous wrote:
I can't go on to the loan. I am self employed and haven't worked long enough to be put on it. Maybe about 8 months off and on. I calculated everything and with his debt plus mine, it would be about a 60% utilzation. I have $4400 debt, while he has the 14,000 he is adding to mine. I am sure my score will go down, but maybe not by much since right now it is at 54% (before the new $23,000 cc) and without his debt it would be only 12%.

I hate being the grump... but there is a reason why mortgage companies look at debt to income ratios. If when you combine your debts and income together, you are above the thresholds, I would think long and hard if you can afford the mortgage. Your expenses will be going up by owning a home. Having a home is almost like having another baby. There is always something you need to buy it.

My advice is to get a card or two with a 0% intro rate. Do the BT's. See how much debt you can eliminate in the next 6 months without having to pay interest. Once most of the debt is paid off it will be easier to get mortgage and at a better interest rate.

Re: Open CC to pay off debt

Anonymous — Wed, 22 Jun 2016 02:25:53 GMT

Yes, we are going to apply for another loan in February. His debt to income will be great as it is now. The collection account is what is holding us back because we can only get 135 and he wants at least 155 to get into a better area.

Re: Open CC to pay off debt

Anonymous — Wed, 22 Jun 2016 08:42:18 GMT

@Kevin86475391 wrote:
@takeshi74 wrote:
@Anonymous wrote:
I have a $2000 balance from a 24% card I would love to transfer.
Is this the only card you have? Is this the only credit account that you have? What's the revolving utilziation on that card? Revolving utilization is simply balance(s) / limit(s)/ Both the revovling utilization for each of your cards and your overall revolving utilization for all your cards matter. As an example, if that card has a $10,000 limit:
$2,000 / $10,000 = 20%

General advice is do not exceeed 30%. If you have hiigh revolving utilization then don't rely on opening a new account to solve your problem. The revolving utilization on the new card you intend to transfer to will matter as well. If you're looking to transfer your $2K balance and his $8K balance that's a total of $10K, Ideally you'd want a new card with a limit of at least $30K. If you can't do that then you'd need to pay down the revolving utilization as quickly as possible on the new card after transferring the balances.

For the most part I very much agree with all of Takeshi's points, except I do have a slightly different take on the above comment. All of that is very much true in general for maintaining good credit, but it sounds like the OP's personal priorities and situation may be different than strictly maintaining good credit (please correct me if I'm wrong).

You're not planning to be on the mortgage right, just your boyfriend? In that case your credit score isn't relevant to the mortgage, and while I would never actively encourage someone to max out a credit card and tank their scores, if getting the mortgage and getting into a safer neighborhood is your priority than that could certainly be extenuating circumstances.

Are you concerned with doing anything else with your credit in the near term like getting a car loan, personal loan, etc.? Hurting your score through utilization, and even triggering balance chasing AA (adverse action) can be a fairly short-term, correctable problem as long as you're able to pay off the balance while it's under the 0% terms. Missing a payment, having a late payment, or other derogatory accounts is much more serious and takes much longer to correct (often requiring you to wait 7 years for the bad stuff to age off). By contrast your utilization has no 'memory' component in the scoring; it's just whatever your utilization is in that moment. So if you have it at 80% for awhile, absolutely that's going to be terrible for your credit and may cause AA that could have other negative effects, but from a utilization standpoint the damage is completely erased once the balance is paid off.

So I would say focus on what makes the most financial sense in terms of actual cash dollars as well as what makes the most sense for your family. Sacrificing your credit score in the short term (in a way that is relatively easy to fix if you have funds) for the sake of helping your partner qualify for a mortgage and getting yourselves and child into a safer environment doesn't sound like the worst idea to me, especially if it's truly only affecting your score on paper and not costing you money.

Of course there are a lot of caveats like the security and stability of your relationship, whether or not you have any other solutions, and of course whether or not you will be able to pay the balance in full before the 0% terms expire (and remember your expenses are likely to rise with the purchase of a new home and as homeowners having a solid emergency fund in place becomes more important than ever. So make sure to budget for that and crunch the numbers).

Anyway, I realize that's not what you asked and all this is just a side point, but I'm just saying you may possibly feel justified in maxing out the new card if you can only get approved for around 10-12K or something instead of the 30K+ you'd need for maintaining good credit. It's a very important personal decision that you'll need to weigh in the larger context of your life.

Anyway, good luck with whatever your decide and I hope things work out!

Solid advice.

Re: Open CC to pay off debt

Anonymous — Wed, 22 Jun 2016 09:08:54 GMT

@Anonymous wrote:
I have a question. What if you were on the mortgage/loan as well? Would that help the approval odds?

The reason I ask is that right now I am suspicious of everyone. My cousin is just going through a nasty divoce right now where she will probably end up with very little. While she took on her share of the bills and debt, the property was in his name (including the house she inherited when her father died). I know every situation is different, so forgive me if this sounds rude, but loads of red flags pop up for me when I hear a plan in which one party wants another to take on debt so they can obtain assets.

We are thinking along the same lines... I started a response, but decided to hold off until after I read the entire thread just in case some of my questions were answered.

Re: Open CC to pay off debt

Anonymous — Wed, 22 Jun 2016 09:12:23 GMT

@CreditDunce wrote:
@Anonymous wrote:
I can't go on to the loan. I am self employed and haven't worked long enough to be put on it. Maybe about 8 months off and on. I calculated everything and with his debt plus mine, it would be about a 60% utilzation. I have $4400 debt, while he has the 14,000 he is adding to mine. I am sure my score will go down, but maybe not by much since right now it is at 54% (before the new $23,000 cc) and without his debt it would be only 12%.
I hate being the grump... but there is a reason why mortgage companies look at debt to income ratios. If when you combine your debts and income together, you are above the thresholds, I would think long and hard if you can afford the mortgage. Your expenses will be going up by owning a home. Having a home is almost like having another baby. There is always something you need to buy it.

My advice is to get a card or two with a 0% intro rate. Do the BT's. See how much debt you can eliminate in the next 6 months without having to pay interest. Once most of the debt is paid off it will be easier to get mortgage and at a better interest rate.

Solid advice CreditDunce.

Re: Open CC to pay off debt

Anonymous — Wed, 22 Jun 2016 12:44:54 GMT

@Anonymous wrote:
Yes, we are going to apply for another loan in February. His debt to income will be great as it is now. The collection account is what is holding us back because we can only get 135 and he wants at least 155 to get into a better area.

I understand wanting to get into a better area, but can y'all afford a $155K mortgage. It would be worse if you were approved for a mortgage, got the house, and then lost it because it's too expensive.

There are a lot of moving parts to this scenario. I'm curious... We know about your debt. How did he accumulate $14K in debt. Does the $14K belong to both of you or is it just his? I ask, not because I'm prying but because it's important.

Re: Open CC to pay off debt

Anonymous — Wed, 22 Jun 2016 10:25:04 GMT

Dont get eager to get into mortgage debt. Its added stress into stress. Just because you can approve for a bigger mortgage means you should get one. Transfer your debt get it paid off then reevaluate a new debt. Sorry mother hen here but i think you might be emotionally involved in the thought of a new home and with new home come keep up, fixes, lawns, new taxes and insurance and furnishing and oh...what about emergency funds. Just consider big pitcture.

Re: Open CC to pay off debt

Anonymous — Wed, 22 Jun 2016 11:20:07 GMT

Thlcxd wrote:

I really don't want to screw my credit up because

around the age of 18-25 it was a 500 something, because there were 2 collection accounts from another state I had never been to saying I owed thousands for medical treatment.. I tried for years to get it removed but it just stayed on my account.

The past 2-3 years it had went from 500 to 717. (So you have something to lose)

But then again, I won't be taking out any kind of auto or personal loan (You're borrowing in your name....why do you think it's a HUGE difference?)

and won't be able to get a home loan for years because I don't have enough work history.

I really want to make the best decision for my family.

I'm just hoping he comes through and actually pays! I mean, I know he will pay but I am saying have it paid off by the 15 months 0% interest. Because that would be ideal.

*See you're already concerned (as you should be)

1) Reread your situation from a 3rd party POV vs your 'wants' feelings and 'hope fors' and use logic only...no heart, just head...again just for you!

2) I'm not a huge fan of non-married ppl taking on that much debt of another BUT

If we're moving beyond that...I'm not getting why you poo poo a personal loan over some CC offer that WILL expire with oir w/o that balance truly being paid off by the BIG BAD due date!

Folks the CC banks on you NOT making that date, so after 15 months you now have balloning REVOLVING CC debt and at 'what' utilization rate? (further dragging and keeping your credit score down).

All things = 'if' I were doing this I'd prefer to use the FIXED term loan and rate of a personal loan...that way 'if' you 'hero' the debt and get it paid...ok you 'lost' a bit of %...HOWEVER if 'life' prevents the 'S' to shine across the chest

a) you know what your payments are

b) you know when they are and how much your % is w/o question...you CONTROL how much LESS youy pay in % based upon your ability to slice thru that debt and 'if' the PLAN is the KILL it in 15 months...nothing STOPS one from doing so.

But the safety net is wider and better (IMHO) using a PL vs 'hopping' the revolving card gets paid 'in the nic of time prior to getting burned' + your util ratio isn't locked up the entire time that you are paying (thus your score actually looks better b/c of the lower CC debt/ratio...again b/c the debt is in the loan vs listed as CC util)

The other + of that is 'if' trouble starts brewing you can 'save' yourself easier b/c your credit score is higher (again b/c the debt/raio looks good b/c the CC balances are low) so in a pinch another account can be opened or at least the already pbtained cards can be used....the other way around you wouldn't qualify b/c all that debt would be on CC's thus making pulling down your score ....catch-22 in the wrong direction

Bottom line 'if' the plan is to 'kill' the debt in 15 months......there isn't a huge difference

However IMO for safety reasons I prefer the installment option b/c just in case that debt isn't paid off within 15 months ...it doesn't kill your credit and it will cost less if you don't meet the 15 month deadline and the 'cost' of the loan over 15 months would have been negligible, if you do meet the deadline!

Good luck!

(One last thing....you might want to rent in a better area until you guys are more financially stable and ready for home ownership...I'm a Dad...I 'get' wanting a better place for your kids but parents need financial stability to raise those kids w/o nonsense on the day-to-day....otherwise things get worse from some other source...you can't afford IMO to put yourself on shakey ground behind this ONE move, when kids have a long childhood and many things they need their parents to be financially able to do w/o crazy pressure BECAUSE of trying to buy a 'dream' too early

Just friendly advice...you said your work hasn't been steady and you have 'some' concren with 'him' paying ALL that debt in a little year a year's time ....that might be too much to bite off over a short amount of time...think about it 15 months pay this, then that, then house expenses, then home owner surprises, then kid stuff and B-day parties, maybe a wedding and on and on and on ...how much can REALLY get done over the next 15-36 months?

While a relationship AND parenthood AND work...all survive and strive? come on now?

Re: Open CC to pay off debt

Anonymous — Wed, 22 Jun 2016 11:59:39 GMT

We have a place right now where we had to remodel the bathroom and kitchen from scratch. There were massive leaks and tons of mold. The rooms were just beams when we got rid of everything hazardous. We did it ourself, while I was pregnant. We also had to tear up the carpet because there was mold everywhere. The neighbor has around 500 used tires just sitting in the yard collecting water and breeding mosquitoes. The county was notified in February and said they will not be removed until next January. I live in Florida, so mosquitoes are rampant. We cannot even go outside. If I open the door for a second, a bunch come in. And we just found out the water pipe in the yard busted because a utility worker truck parked on it and broke it. So the yard floods, and the water bill is sky high. We fixed it, then it happened again. Apparently, people think my yard is a parking lot.

After I transfer the $14,000 and he pays it off we will look into getting a bigger loan. With a $155,000 loan, he can afford that easily. His debt to income will be about 900:4500. Roughly $58,000 a year. We aren't concerned with having to fix things in a new house, because he will be able to do it. He does lawn care and landscaping on weekends as a side job, owner and operater, so he will be able to maintain the lawn.

I don't plan on having a wedding or anything especially not until we get into a house for a while. We don't make huge purchases and when we do its home related, but we are able to do so without breaking the bank.

Oh, he accumulated the $14,000 from a $9000 military credit card that is in collections and also the remaining car balance. He has a new '16 truck that is $700 a month, so he is transferring the car since it's only $5000. Hmm, the military card is only in collections because they required him to go to a base that is about 40 miles away to pay it in person each month, but he could no longer have access to the base because his military ID was expired. (Active reservist after leaving the marines) It was stupid, like HOW could he pay it when they wouldn't allow him on base and they didn't allow payments by phone or mail? That is the only thing stopping him from getting a loan right now. That's $400 a month, car is $220. Transferring to my card he will pay $800 a month. He has 2 other monthly accounts he has to pay but they are super low $38-130 a month.

We will be using the VA loan so that helps with 0% down payment.