topic Re: 653 to 753 in 5 months! in Understanding FICO® Scoring

653 to 753 in 5 months!

Anonymous — Thu, 12 Feb 2009 20:59:18 GMT

Seeing my score at 653 was my wake-up call. Hopefully, seeing my post will be yours. High CC balances will ruin your FICO score! In September, my overall utilization was a shameful 97%. It is 48% now. I know, not the recommended 1-9% but I am working on it. The only inquiry on my report dates back to 28April08. I have 1 CC that reports a balance. I use the other CCs to keep them active but PIF before the closing date.

Remember that a journey of a thousand miles begins with 1 step. Keep chipping away at those CC balances and you will see your scores rise. It won't happen overnight but it will happen. I am living proof.

Message Edited by tonnie39 on 02-12-2009 03:59 PM

Re: 653 to 753 in 5 months!

llecs — Thu, 12 Feb 2009 20:56:03 GMT

Congrats! How did you do it?

Re: 653 to 753 in 5 months!

Anonymous — Thu, 12 Feb 2009 21:02:01 GMT

Thanks! I paid all but 1 of my CCs.

Re: 653 to 753 in 5 months!

MsKiwi — Fri, 13 Feb 2009 16:48:59 GMT

@Anonymous wrote:
Seeing my score at 653 was my wake-up call. Hopefully, seeing my post will be yours. High CC balances will ruin your FICO score! In September, my overall utilization was a shameful 97%. It is 48% now. I know, not the recommended 1-9% but I am working on it. The only inquiry on my report dates back to 28April08. I have 1 CC that reports a balance. I use the other CCs to keep them active but PIF before the closing date.

Remember that a journey of a thousand miles begins with 1 step. Keep chipping away at those CC balances and you will see your scores rise. It won't happen overnight but it will happen. I am living proof.
Message Edited by tonnie39 on 02-12-2009 03:59 PM

Just goes to show how much utilization plays into fico scores. I bet when you get that balnce to 29% then at 9% you are going to see even better scores. Congrats to you ..this is HUGE!

Re: 653 to 753 in 5 months!

Anonymous — Fri, 13 Feb 2009 17:08:38 GMT

100 points in 5 months!?! That's just incredible! Congratulations!

How were you able to stop using your cards as much? Did you switch to cash, stop spending as much, get an inheritance that you put to good use, what?

Tell me. Didn't you feel a great sense of relief every month that those balances got paid down? Like a weight was slowly getting lifted off your shoulders? It did for me.

Keep up the good work. I can't wait to see what your score is when you are below the 9% mark!

Re: 653 to 753 in 5 months!

Junejer — Fri, 13 Feb 2009 18:12:23 GMT

Congrats Tonnie. You are at 753 with 48% util. You will probably be in the 790s, if not 800 when you hit 9% or less. Nice job.

Re: 653 to 753 in 5 months!

Junejer — Fri, 13 Feb 2009 18:13:40 GMT

Okay bulbisaur, I had praised Psychic for having the highest score that I have ever seen, but now the throne belongs to you my liege. Very, very well done.

Re: 653 to 753 in 5 months!

Anonymous — Fri, 13 Feb 2009 20:13:58 GMT

(blush blush) Thanks, Byrdman! Psychic still deserves all the praise, really.

Those two points between our scores cannot begin to put me in the same league as Psychic, who has dedicated countless hours to helping and encouraging everyone here. If I could give those two points to Psychic, I would.

Actually, all that really means is that my score was higher on Feb. 10th. But it's nice to be queen, even for just one day. (King for a Day - I think that was a Thompson Twins song...)

Re: 653 to 753 in 5 months!

Junejer — Fri, 13 Feb 2009 23:34:36 GMT

Well, 6 points away from the perfect FICO is the closest that I have seen. Psychic was just jazzed to see some movement on his scores. They are typically booooorrrriiiiinnng, they just don't move.

Re: 653 to 753 in 5 months!

haulingthescoreup — Fri, 13 Feb 2009 23:36:21 GMT

ByrdMan wrote:
Well, 6 points away from the perfect FICO is the closest that I have seen. Psychic was just jazzed to see some movement on his scores. They are typically booooorrrriiiiinnng, they just don't move.

Such a drag to be stuck in the 840's! *sighs*

It's always great to see scores like these. They energize the rest of us! Congrats again.

Re: 653 to 753 in 5 months!

Anonymous — Sat, 14 Feb 2009 00:05:45 GMT

@haulingthescoreup wrote:
@Junejer wrote:
Well, 6 points away from the perfect FICO is the closest that I have seen. Psychic was just jazzed to see some movement on his scores. They are typically booooorrrriiiiinnng, they just don't move.

Such a drag to be stuck in the 840's! *sighs*

It's always great to see scores like these. They energize the rest of us! Congrats again.

I pulled my EX score again today and it was still 842! If I could pull EX again this June, September or December, it would probably still be 842!

Re: 653 to 753 in 5 months!

Anonymous — Sat, 14 Feb 2009 00:10:18 GMT

@Anonymous wrote:
(blush blush) Thanks, Byrdman! Psychic still deserves all the praise, really.

Those two points between our scores cannot begin to put me in the same league as Psychic, who has dedicated countless hours to helping and encouraging everyone here. If I could give those two points to Psychic, I would.

Actually, all that really means is that my score was higher on Feb. 10th. But it's nice to be queen, even for just one day. (King for a Day - I think that was a Thompson Twins song...)

Thank you so much for your kind words, bulbisaur.

Congratulations on your wonderful score!

Re: 653 to 753 in 5 months!

Anonymous — Sat, 14 Feb 2009 00:13:08 GMT

@Anonymous wrote:
Seeing my score at 653 was my wake-up call. Hopefully, seeing my post will be yours. High CC balances will ruin your FICO score! In September, my overall utilization was a shameful 97%. It is 48% now. I know, not the recommended 1-9% but I am working on it. The only inquiry on my report dates back to 28April08. I have 1 CC that reports a balance. I use the other CCs to keep them active but PIF before the closing date.

Congratulations, tonnie39!

Re: 653 to 753 in 5 months!

Anonymous — Sat, 14 Feb 2009 00:33:52 GMT

@Anonymous wrote:
100 points in 5 months!?! That's just incredible! Congratulations!

How were you able to stop using your cards as much? Did you switch to cash, stop spending as much, get an inheritance that you put to good use, what?

Tell me. Didn't you feel a great sense of relief every month that those balances got paid down? Like a weight was slowly getting lifted off your shoulders? It did for me.

Keep up the good work. I can't wait to see what your score is when you are below the 9% mark!

I had gotten a CLD from BofA from $5000 to $4200. I was fearful that the other CCCs would follow suit so I stopped using all my cards. Every few months, I will make a small purchase on the cards that have a $0 balance to keep them active but I PIF before the closing date. When I began using my cold, hard cash, I noticed that I stopped impulse buying and splurging. Thankfully, I didn't get an inheritance. LOL. I used some money that I had been saving for a rainy day.

I finally feel free! I didn't realize how burdened I had become from my CC debt. I look forward to seeing my scores once I get my utilization down even further.

Enough about me, lets talk about you! Your scores are amazing!!!!!!!!!!!!!! Please feel free to share the secret to your success. Psychic, you can chime in on this one, too. Your scores are equally impressive!

Message Edited by tonnie39 on 02-13-2009 07:33 PM

Re: 653 to 753 in 5 months!

Anonymous — Mon, 16 Feb 2009 15:20:27 GMT

Hi Tonnie.

The way I got out of debt was using low-interest balance transfers. I had over 20 accounts (including credit cards, gas cards, student loans, etc.) all max'd out, with over $64K in balances. Since I had always paid my bills on time, I was constantly getting "0% for 10 months" or "1.99% for life of balance" offers from my cards. Of course, with 100% utilization rates, I couldn't take advantage of them.

I was talking to my Mom about it one day, and she had just gotten a "1.99% for life of balance" on a card that had nothing on it and a credit limit of over $20K. She let me use that balance. I checked to see which cards had offers on them that I couldn't take advantage of, transferred the whole balance off, waited for the statement to show a $0 balance and then transferred the next one with an offer onto that one. So, it was rotating balance transfers that I used. I had this whole spreadsheet done out for like 4 years, making sure that each balance was paid off before the expiration of the special offer. (I just looked at the spreadsheet to confirm this information.) I went from an average interest rate of around 24% to having all all of my debt on cards under 2.99%. I went from paying over $700/mo in interest to less than $100/mo. It took me almost 4 years (Nov 2002 to Sept 2006) to get everything paid off. Since then, I have paid my balances every month in full, so I don't accrue any interest.

2 years ago, my parents had FICO scores (from myFICO) that were more than 100 points above mine. Now, I have one score higher than theirs! Of course, all of their scores are over 800, while I still have one below 800.

I could not have done what I did without my parent's help. Of course, they knew me well enought to know that I would pay them back and I did, ahead of schedule. Tonnie, you did this all on your own through discipline and hard work. Kudos to you!

Re: 653 to 753 in 5 months!

Anonymous — Mon, 16 Feb 2009 16:55:08 GMT

@Anonymous wrote:
...I went from an average interest rate of around 24% to having all all of my debt on cards under 2.99%. I went from paying over $700/mo in interest to less than $100/mo. It took me almost 4 years (Nov 2002 to Sept 2006) to get everything paid off. Since then, I have paid my balances every month in full, so I don't accrue any interest.

When I received the $800 CLD from BofA, I was offered a 0% BT from Capital1. I didn't know what to do so I posted a thread asking if I should do the 0% BT with Capital 1. The general concensus was to decline the offer so I did. I believe the others felt that I should stay under the radar to keep the other CCCs from CLD my other cards.

I will be receiving $13,200 over the next 6 months. I have a BofA CC with a CL of $10,500. The balance is slightly less than $8000. The interest rate is rather excessive. I have $18,000 in federal student loan debt that has been out of deferrment since 15Jan09 (although I finished my degree in Dec05). My interest rate is 3.960%. I think my best move would be to pay off the CC debt first and continue paying on my student loans. My friends think I should use the entire $13,200 toward my student loans. The theory is that if I have financial trouble in the future, the student loans cannot be dismissed but the unsecure debt can be. I don't forsee having any future financial troubles but I am painfully aware that anything can happen at any time to anyone. What do you think is the best course of action?

Re: 653 to 753 in 5 months!

Anonymous — Mon, 16 Feb 2009 18:01:33 GMT

tonnie39 wrote:

I will be receiving $13,200 over the next 6 months. I have a BofA CC with a CL of $10,500. The balance is slightly less than $8000. The interest rate is rather excessive. I have $18,000 in federal student loan debt that has been out of deferrment since 15Jan09 (although I finished my degree in Dec05). My interest rate is 3.960%. I think my best move would be to pay off the CC debt first and continue paying on my student loans. My friends think I should use the entire $13,200 toward my student loans.

In my humble opinion, you should pay off the credit card debt before the student loans. In fact, for me, it's not even a close contest.

Three reasons:

1. The credit card is an unsecured line of credit. I believe the student loan is considered to be an installment account (at least that's what my credit report says about my Sallie Mae loans.) Making all of your payments on an installment loan is actually good for your credit in the long run, especially once you have enough of it paid off.

2. Interest rates and types. The interest rate on your credit card is higher than on your student loan, so paying down that balance will reduce the amount you pay monthly for the priviledge of borrowing money. Also, I believe student loans do not compound the interest rates like credit cards do. Credit cards compound daily (the worst), while I think student loans compound monthly. The difference over time between the two can be huge!

3. You can pay off the total of your credit card debt. This means, after verifying that an entire billing cycle has gone by and your credit card shows a $0 balance, you will now have access to this card without paying interest. Just as you are using cash to buy only what you can afford, applying the same concept to your credit card will actually give you access to that money for a 25-day grace period or so. Just never, ever pay late and always pay the total bill every month.

I understand what your friends mean with respect to bankruptcy laws and what can be discharged, however, this doesn't sound like your biggest problem. If you had recently lost your job and you were worried about not finding another one, then you might think about going the other way. However, let's be optomistic and assume that you will have your job for at least another year or two. With the savings in your interest payments, you will have both bills paid off before you need to worry about your job loss, not just one bill. And, with the work that you are doing on this, I wouldn't foresee financial troubles in your future.

Then, once your credit card is paid off, I would "pay ahead" on your installment loan. This is what I did with my student loans and car payments. I got to the point where I was 6 months ahead on my car loan and 8+ months ahead on my student loans. If I had lost my job, I would have had 6 months with no payments on either and would not have been late. This was very comforting for me, since at the time I worked on commissions, and the winter months brought in half of the money as in the summer. You can't "pay ahead" with credit cards. Oh! And just because I was "paying ahead" on those loans, doesn't mean that the interest wasn't getting lowered every month. By the end of each loan, when I didn't have to skip any payments, they were just paid off early, with a reduction in the total amount of interest paid.

Re: 653 to 753 in 5 months!

Junejer — Tue, 17 Feb 2009 04:45:31 GMT

Hi bulbisaur, I take exception with one thing. CCs calculate interest on the average daily balance. Closed end loans actually compound interest, which is why you will pay more actual interest on an installment loan than you will on an open-ended loan, all other things being equal. That's why 6% on a mortgage isn't 6% unless you pay on it for the full term.

That said, I think that she ought to pay off the CCs first for the other reasons that you stated.

Re: 653 to 753 in 5 months!

niecey89 — Tue, 17 Feb 2009 05:58:10 GMT

Congrats on your scores. I am trying my best to get into the 700 club myself. Like everyone else stated get those CCs first then hit the student loans with extra payments a month (that is what i am trying to do with my unemployment..it use usually the interest that compounds daily) or increase your overall monthly payment. Make a budget plan for yourself. Also make sure you pay yourself first (for emergencies).

Congrats again

Re: 653 to 753 in 5 months!

Anonymous — Wed, 18 Feb 2009 14:48:26 GMT

Hi Niecey. Your scores are coming up nicely. It sounds like you are really doing the right things to get into and stay in the 700 club. Great job.

ByrdMan wrote:

ByrdMan,

I want to be sure I understand what you are saying. A close ended loan will calculate up front how much principle and interest you will pay total for the life of the loan, and divide that by the total number of payments. If you pay extra every month, you will pay the loan off earlier, but you will have still paid the same amount of interest dollars. Since this interest was paid over a shorter span, your interest % is actually greater. Correct?

However, this is not the case with loans that have no prepayment penalties, correct? If your 30-year mortgage payment is $1,500/mo, which includes $1,000 in interest and $500 in principle, and you make payments of $2,000/mo, your total interest paid will be less overall. Correct? This is why it is more important to pay down the priniciple early in a loan. Bloomberg.com actually has a calculator that shows your savings for prepayments.

This is from Salliemae's website:

Can I prepay my loans?

Yes, you may prepay your loans in part or in full at any time without any prepayment penalty regardless of repayment plan. By prepaying your loans you can help reduce the total loan cost.

So, it looks like "paying ahead" will also decrease total payments.

Please let me know if I am looking at something incorrrectly.