topic Opinions, please - on the order in which I should do these three things.... in General Credit Topics

Opinions, please - on the order in which I should do these three things....

spritezero1017 — Fri, 23 Aug 2013 12:53:01 GMT

Hello,

I am deciding how to stage the following three moves to best influence my FICO score and to accomplish the two applications for credit I will be looking for. Apologies if it rambles on a bit.

1. Paying off my credit card debt of $5000.00 (across 8 cards - balances from $80 to $950)

2. Applying for AAdvantage Citi card b/c of the very high bonus miles (60K) which I want for overseas travel next summer

3. Possible new car loan of approx. $18,000.

I currently have an Equifax score of 706. I've raised my score about 100 pts in 18 months and I think that's good progress. I carry about $5000.00 in credit card debt. Due to a coming influx of cash I will be able to pay off the debt in full (if indeed that's the best thing to do) in about 2 months. It seems obvious this is the first thing to do. Equifax's credit simulator predicts a score of 786-820 after paying off my CC debt.

I am unsure about the order I should do the other two. Apply for the card I want first or a new car loan (would be about $18,000) first. Which would be a better idea to do first to assure acceptance for both?

I will also have the option of just buying the car for cash. With financing I would have interest, of course and some sort of affect on my credit score - good or bad? With a cash purchase I would save a bit on car insurance and be able to keep that lump of cash liquid in case of emergency.

Any advice on the best sequence of these things would be greatly appreciated. Thanks.

Re: Opinions, please - on the order in which I should do these three things....

llecs — Fri, 23 Aug 2013 18:30:16 GMT

In this order I would do #1, #3, and then #2 last.

Paying down the CCs could likely boost your FICO a good deal and that'll help with #3 and #2.

I'd buy the car in cash [if] I could. Adding a car loan could likely ding your score but only a little and it'll fade away within a year or so. However, you might save hundred/thousands in the long run with lower insurance and no interest.

Re: Opinions, please - on the order in which I should do these three things....

pizzadude — Sat, 24 Aug 2013 13:17:26 GMT

Moving to general credit topics

Re: Opinions, please - on the order in which I should do these three things....

RobertEG — Sat, 24 Aug 2013 16:50:29 GMT

Nos 2 and 3 relate to issues other than credit scoring, such as convenience of a new card or need for a new car.

Thus, their order would depend upon how immeidate or important they are for personal reasons. They could be #1 and 2, but looking at it from purely FICO scoring, #1 is the clear winner.

As for scoring, a new CC will most likely involve a hard pull, and if approved, will necessarily reduce AAoA, having an age of 0. It's effect will depend upon your current AAoA, such as how many accounts and their ages. On the plus side would be an improveent in % util, providing its CL is good, and its usage is kept in check. With a current total of 8 cards, it is not likely to improve mix of credit.

New installments will have the same possible effect on inquiries and AAoA, but arent including in %util of revolving.

Util of installments against loan balance is not a highly-weighted scoring factor.

Unless it improves your mix of credit, it probably will result in a small short-term hit.

Re: Opinions, please - on the order in which I should do these three things....

takeshi74 — Sat, 24 Aug 2013 20:42:19 GMT

@spritezero1017 wrote:

I am unsure about the order I should do the other two. Apply for the card I want first or a new car loan (would be about $18,000) first. Which would be a better idea to do first to assure acceptance for both?

Getting your utilization down (#1) will definitely help with #2 & #3. What is it currently at?