topic Re: Credit Advice in General Credit Topics

Credit Advice

Anonymous — Tue, 07 Feb 2012 20:33:01 GMT

What would be the smartest thing to do? I have $3200 that I am putting towards my credit card debt but need some advice on what to do with it in order to achieve a higher credit score. Right now I am at 662 with 4 years of history. Should I make all of the balances under 30%? or should I pay off the Citi Card since the interest and balance are high?

Balances right now

AMEX- 696.80 @ 16.24% with a credit limit of $1600

Cap1- $1145.02 @ 0% until Sept 2012, 29.99% after that, with a credit limit of $1750

Citi- $2829.97 @ 0% until June 2012, then 29.99% after that, with a credit limit of $4410

Chase- $872.67 @ 17.24 with a credit limit of $1800

Best Buy- $1145.02 @ 0% until June 2013 with a credit limit of $1350

Re: Credit Advice

Anonymous — Tue, 07 Feb 2012 20:40:04 GMT

This is just me, and I might be kinda new to this, but I'd definitely pay off the AMEX and the Chase cards first.

The $3,200 will not only bring those two to $0, but they also will make sure you aren't paying interest for the next few months.

So if you pay off $696.80 and $872.67 now, you still have $1,630.53 left over.

I'd then try to bring that Citi balance down, since the interest kicks in during June. And at 29.99%, I'd definitely be trying to get that card down ASAP.

So, in summary:

AMEX, Chase, Citi (with the remaining).

I'm sure people will have different opinions than mine. But the less you are paying on interest, is the more you are paying off on the principal on the other cards.

Re: Credit Advice

kjm79 — Tue, 07 Feb 2012 21:49:06 GMT

+1 for the most part. I think the only thing I'd do different is instead of throwing the extra at Citi, I'd pay off the Cap1. You've then eliminated one more card you carried a balance on and have one less card to pay by a certain date or incurr the wrath of the interest Gods. You can then also throw more money at the Citi card at that point to pay it off before the 0% ends.

Now you've asked two questions, what's the smartest thing to do with $3200 and how to get your score up. There are different answers to both questions. The smartest thing to do is the advice that's already been given, pay off the two higest interest cards. Utilization is a huge factor in scoring and it's scored on overall util and individual card util. You're current util is 61%. Paying off Amex and Chase will bring you to 50% util. Might see a score bump there. Your Best Buy card is essentially maxed out at 84%. That is killing your score yet, it is the card you should pay off last. So what is your goal? To do the smart thing or raise your score, because they aren't always the same answer.

Re: Credit Advice

Anonymous — Wed, 08 Feb 2012 00:10:51 GMT

@kjm79 wrote:
+1 for the most part. I think the only thing I'd do different is instead of throwing the extra at Citi, I'd pay off the Cap1. You've then eliminated one more card you carried a balance on and have one less card to pay by a certain date or incurr the wrath of the interest Gods. You can then also throw more money at the Citi card at that point to pay it off before the 0% ends.

Now you've asked two questions, what's the smartest thing to do with $3200 and how to get your score up. There are different answers to both questions. The smartest thing to do is the advice that's already been given, pay off the two higest interest cards. Utilization is a huge factor in scoring and it's scored on overall util and individual card util. You're current util is 61%. Paying off Amex and Chase will bring you to 50% util. Might see a score bump there. Your Best Buy card is essentially maxed out at 84%. That is killing your score yet, it is the card you should pay off last. So what is your goal? To do the smart thing or raise your score, because they aren't always the same answer.

You can pay off 3 cards and put a serious dent in the 4th. Paying less interest trumps raising your score a few points.

Re: Credit Advice

DantGwyrdd — Wed, 08 Feb 2012 00:15:14 GMT

@Anonymous wrote:
@kjm79 wrote:
+1 for the most part. I think the only thing I'd do different is instead of throwing the extra at Citi, I'd pay off the Cap1. You've then eliminated one more card you carried a balance on and have one less card to pay by a certain date or incurr the wrath of the interest Gods. You can then also throw more money at the Citi card at that point to pay it off before the 0% ends.

Now you've asked two questions, what's the smartest thing to do with $3200 and how to get your score up. There are different answers to both questions. The smartest thing to do is the advice that's already been given, pay off the two higest interest cards. Utilization is a huge factor in scoring and it's scored on overall util and individual card util. You're current util is 61%. Paying off Amex and Chase will bring you to 50% util. Might see a score bump there. Your Best Buy card is essentially maxed out at 84%. That is killing your score yet, it is the card you should pay off last. So what is your goal? To do the smart thing or raise your score, because they aren't always the same answer.

+1
You can pay off 3 cards and put a serious dent in the 4th. Paying less interest trumps raising your score a few points.

+1 Could not agree more!

Granted, in this case OP will only have to worry about short-term interest from Amex and Chase.

Re: Credit Advice

seattletravels — Wed, 08 Feb 2012 00:31:54 GMT

Paying of Amex, Chase and Best Buy/Capital One would have 3 cards reporting $0 balance. That would be ~$2700, leaving you with just under $500 to put a dent in another card. Again, this is just if you are looking for a score bump. Utilization is factored not just by overall utilization but also how many cards are carrying a balance.

Re: Credit Advice

Booner72 — Wed, 08 Feb 2012 01:32:29 GMT

It depends on your goal. If your goal is increased pointage or debt reduction......................

Re: Credit Advice

Anonymous — Wed, 08 Feb 2012 02:14:46 GMT

My goal would be to have the highest score with the amount I have to pay down my debt with. So from my understanding, it better to have 3 cards with $0 balance and 1 with a balance then to have then all at 30% utilization.

Re: Credit Advice

kjm79 — Wed, 08 Feb 2012 02:57:23 GMT

@Anonymous wrote:

Balances right now

@Anonymous- 696.80 @ 16.24% with a credit limit of $1600-43%
@Cap1- $1145.02 @ 0% until Sept 2012, 29.99% after that, with a credit limit of $1750-65%
@Anonymous- $2829.97 @ 0% until June 2012, then 29.99% after that, with a credit limit of $4410-64%
@Anonymous- $872.67 @ 17.24 with a credit limit of $1800-48%
@Anonymous Buy- $1145.02 @ 0% until June 2013 with a credit limit of $1350-84%

If your goal is to use the money to get a higher score now then you want to pay off Best Buy, Cap1, and Chase. Which takes your current until of 64% down to ~32% while paying off three cards, including your highest utilized card. You should see a bump from this, but might not be as high as you are wanting.

Paying off the higher interest cards of Amex and Chase, and then the Cap1 card would bring your util to ~36%. Again, you should see a bump from this but not a huge score increase.

Seeing as either possible pay downs will get you in the 32%-36% range and would be similiar in score increases opting to pay the higher interest cards initially still sounds like the more sound choice. Helps acheive both goals. Feel free to check my math, it has been a long day.

Re: Credit Advice

Anonymous — Thu, 09 Feb 2012 14:27:57 GMT

The other option does make sense as well.

All in all, I'm sure the $3200 will make the same debt in his overall utilization.

I said he should go with Citi first, because once June hits, if he still hasn't gotten that balance down, that interest rate is going to begin to kill him.

He has a little more time on the Cap 1 card (September 2012).

I guess it's a question of whether he can get Citi down before the interest rate kicks in or not, although I can't debate the psychological effects of paying off 3 and just having 2 left to go. If he can cascade whatever he was paying on the two he closes and the Cap1 INTO the Citi, then it makes sense, but the longer he has that Cap 1 card open, the longer he will be paying a 30% interest on a 1K+ balance.

Either way, the fact that he's applying this money to his balances, makes him a winner in my book.