topic Re: I was 8 points from 700... in Credit Cards

I was 8 points from 700...

StillLearning — Sun, 08 Mar 2009 17:55:45 GMT

Thanks to SO much help from the folks here, I got my score from 543 up to 698 in about a year. I had gotten several CLI's and had low balances to go with them. Then came our first real family vacation and thinking "well we might never get to do this again...", Christmas, a $3,000.00 emergency home repair, etc., etc.

Now I'm really sweating it and am constantly worried about it. I have 8 CC accounts, 1 with no balance in ages, another just paid off, and am working my way down from about 90% UTI. My EQ has dropped to 651 and is staying there so far, but I am worried about CLD's (none yet though). I pay the largest amounts I can toward CC debt and am now down to about 55% (?) UTI since December.

I have learned a very valuable lesson here. Those cards aren't "extra money" in my wallet, which, I guess is how I thought of them until seeing all the damage, they are a privilege that I had lost control of, and am now paying dearly for. I can totally understand how people over time build up the debt, and I can safely say this will never happen again - I enjoy a good night's sleep way too much! A consolidation loan has crossed my mind, but I feel like I have done this, and now this is the price to pay. I guess the longer I sweat it, the less likely I am to ever do it again.

Anyway, here's my question (sorry for the long, long approach! My balances are:

Chase - $800 / $1,500 (18%)

Penneys $1,474 / $1,500 (0% until 2/10)

Citi - $1,300 / $1,500 (0% until 11/09)

Cap One - $498 / $1,000 (19%)

Best Buy - $580 / $750 (0% assuming pif by 6/09)

Target - $800 / $1,000 (22%)

Ikea - $0 / $500

FB $0 / $300

I can pay about $600.00+ per month, so what would be the best approach to avoid CLD's and even worse, having a card closed by the CCC? Is the high UTI per card my biggest problem, or should I try to pay down to 50% overall, then 30% and so on?

Re: I was 8 points from 700...

smallfry — Sun, 08 Mar 2009 17:58:27 GMT

Sorry OP. Life with low limit cards. If you had just one high limit credit card from a credit union for example this would all be a moot point. Pay 'em down as quickly as possibe. Good luck.

Re: I was 8 points from 700...

haulingthescoreup — Sun, 08 Mar 2009 18:14:57 GMT

I'd shoot to get as many as possible at 49% or less, and then go after them in the way that makes the most sense to you. In that second state, you can go by highest APR first, lowest balance first, CC you want to hang on to the most, most paranoid CCC first, etc.

Just to give you some target numbers. Each represents 49% of the current CL:

Chase - $800 / $1,500 --> $735 or less
Penneys $1,474 / $1,500 --> $735 or less
Citi - $1,300 / $1,500 --> $735 or less
Cap One - $498 / $1,000 (19%) --$490 or less
Best Buy - $580 / $750 --> $367 or less
Target - $800 / $1,000 --> $490 or less
Ikea - $0 / $500 -
FB $0 / $300 -

Be sure to check the terms on your 0% cards and make sure that there won't be some sort of retroactive interest charges applied if you haven't PIF'd by the end of the term. (This does sometimes happen.)

It's a life lesson that a lot of us learn at one point or another. Hope you can dodge the bullet while you're getting it all paid off!

Re: I was 8 points from 700...

StillLearning — Sun, 08 Mar 2009 18:28:27 GMT

I guess by the 50% first, I'll go after even the 0% now too, to get the UTI down. That's kind of what I thought, just wish I could pay faster... Thanks!

Re: I was 8 points from 700...

Anonymous — Sun, 08 Mar 2009 19:33:30 GMT

SL,

Keep up doing great job! Here is my 2 cents, don't pay extra money to CC, meaning pay off cards with higher APRs first. However, if you have two cards with similar APRs but vastly different utilization, decrease utilization first. Finally, work on that Chase card, they are somewhat more jittery than the rest.

Re: I was 8 points from 700...

TangMeister — Sun, 08 Mar 2009 20:25:06 GMT

HTSU gave you perfect advice, as always. Nothing more to add from me, except good luck!

Message Edited by TangMeister on 03-08-2009 01:25 PM

Re: I was 8 points from 700...

clocktick — Sun, 08 Mar 2009 20:43:51 GMT

What are your minimum payments on them all?

Re: I was 8 points from 700...

StillLearning — Sun, 08 Mar 2009 21:51:48 GMT

Minimum payments are only around $20-25 per month on each card with a balance - Penneys doesn't even have a minimum payment. I am paying lots over all the minimums on all of them though (except for Penney's).

Re: I was 8 points from 700...

Anonymous — Mon, 09 Mar 2009 17:23:23 GMT

Anyway, here's my question (sorry for the long, long approach! My balances are:
Chase - $800 / $1,500 (18%)
Penneys $1,474 / $1,500 (0% until 2/10)
Citi - $1,300 / $1,500 (0% until 11/09)
Cap One - $498 / $1,000 (19%)
Best Buy - $580 / $750 (0% assuming pif by 6/09)
Target - $800 / $1,000 (22%)
Ikea - $0 / $500
FB $0 / $300

I can pay about $600.00+ per month, so what would be the best approach to avoid CLD's and even worse, having a card closed by the CCC? Is the high UTI per card my biggest problem, or should I try to pay down to 50% overall, then 30% and so on?

Pay down Chase, Cap One and Target to 49% as per above (as the difference in the interest rate is minimal). Min pay on the 0%ers until teaser expires, even if you have the cash (bank the cash and earn interest if possible). Then bang out the high APR's in order of higher interest rate. Forget your FICO for 6-7 months, it will come back. Check best buy's and pennies terms to make sure they don't charge you interest from day 1 if you don't PIF. If they do you have to get those PIF by the end of the teaser as the effective interest rate for missing that one day is staggering.

- month 1 - $65 to chase, $10 to cao one, rest to Target

- month 2 - pay off Target

- month 3 - pay off cap 1 (or maybe best buy if they will accrue interest from day 1)

- month 4 - pay off chase

- month 5 - pay best buy if lefts

- then save at E-trade/ING etc until citi comes due and pay it

- then save and hit the pennies

Do not miss a min ever as those 0%ers are huge.

Again - your FICO will come back either way. Mine way is slower probably at first but faster overall as you will have more $ to pay everything off faster. The key is to save total interest expense. Cap One and Chase may CLD you, but I don' think the stores will, and if they do, they do.