topic Re: Utilization question in General Credit Topics

Utilization question

Anonymous — Tue, 22 Feb 2022 02:46:28 GMT

We need to consolidate our debt and am looking at some options. But first we have 3,000 to 4,000 to throw at it to get some of the utilizations down to possibly get a better interest rate. One is an installment loan from last summer when our HVAC failed. The payments are ridiculously almost all going to interest and we are still well above 90% utilization several months later. Would paying extra on this loan so it is less than 89% make a difference or should we apply that money to a credit card? It has the highest utilization and our FICO has taken a huge drop since we took it out last summer.

Re: Utilization question

FireMedic1 — Tue, 22 Feb 2022 09:56:02 GMT

@AnonymousWelcome

Credit card util does more to a score than a loan points-wise. The only real score change moves on a loan is once its under 9%. We say finances over FICO. If you could list out the accounts you have. Then we can help you with a plan to get a hold of things.

Creditor/Credit Line/Balances/APR

Re: Utilization question

Anonymous — Tue, 22 Feb 2022 13:27:14 GMT

@FireMedic1 wrote:
@AnonymousWelcome
Credit card util does more to a score than a loan points-wise. The only real score change moves on a loan is once its under 9%. We say finances over FICO. If you could list out the accounts you have. Then we can help you with a plan to get a hold of things.
Creditor/Credit Line/Balances/APR

I would list them out, but I made a spreadsheet with all their limits and each amount the tiers of 88%, 68%, etc., current balances and how much to pay off to get to the next tier. The highest is Costco VISA that gets our gas and groceries and that one is near its limit right now, so I would like to pay it down to 88%. The rest are lower than that. Some cards need less than $100 to get to the next tier, one can be paid off completely. I have $3000-4000 to throw at them right now and that would move the Costco Visa below 88%, the HVAC loan below 88%, 3 cards down to 68%, 1 card to 48%, and 1 card to 0.

Almost all cards are at 0% right now, so most payments are all principle and we usually pay more than minimum payment, but all those payments are killing our budget, so we would like to refinance them into something for a smaller payment. We've been planning that since last fall as our family expenses have increased substantially (life insurance policy monthly payment went from $40 to almost $400, car insurance more than doubled, not to mention the increase in gas and groceries prices). We haven't taken a vacation since 2018, and never eat out, but we have kids with food allergies, so that impacts the grocery bill. I'm hoping once our scores come back up, we can shop around for better insurance.

Last summer, our FICO 8 scores were at the mid-700s, now they are below 700. We saw a huge drop when we took out the loan for the HVAC. That balance has barely budged, we still owe $7300 out of $7500 after 7 payments. It's a horrible loan. I assume it's being reported more like a credit card, not something like a car loan. So I'm thinking making a principal only payment to get it to 88% would help.

Re: Utilization question

pizzadude — Tue, 22 Feb 2022 16:44:18 GMT

I understand wanting to improve your FICO scores, but unless you have an impending need to apply for financing I'd focus on paying down your debt with the highest interest rate first, which sounds like your HVAC loan. Also you should check your reports to see if it is showing as a revolving account vs installment, if so then paying it down will also help to bump your scores.

Re: Utilization question

FireMedic1 — Tue, 22 Feb 2022 17:13:26 GMT

This^^^^^^ from @pizzadude

If there wasnt a loan then it would be easy. Util doesnt move the needle much with loans as i said earlier until its under 9%. Thats why we say Finances over FICO. If the loan is the highest rate APR over your cards. Focus on getting that paid down. Once the loan is out of the picture. Then nail the cards and get them all the way down. Paying interest is like throwing a buck out your window on the highway every mile. Your not going to get it back. If you did. I'd be coming to save your.........

Re: Utilization question

Anonymous — Tue, 22 Feb 2022 17:14:31 GMT

Thank you! I will look to see how it is reported!

Re: Utilization question

SouthJamaica — Tue, 22 Feb 2022 19:12:38 GMT

@Anonymous wrote:
We need to consolidate our debt and am looking at some options. But first we have 3,000 to 4,000 to throw at it to get some of the utilizations down to possibly get a better interest rate. One is an installment loan from last summer when our HVAC failed. The payments are ridiculously almost all going to interest and we are still well above 90% utilization several months later. Would paying extra on this loan so it is less than 89% make a difference or should we apply that money to a credit card? It has the highest utilization and our FICO has taken a huge drop since we took it out last summer.

No. A payment to your installment loan would probably mean nothing for your scores, whereas properly placed payments to credit card accounts could work wonders, depending on what's in your profile.

Re: Utilization question

SouthJamaica — Tue, 22 Feb 2022 19:19:30 GMT

@Anonymous wrote:
@FireMedic1 wrote:
@AnonymousWelcome
Credit card util does more to a score than a loan points-wise. The only real score change moves on a loan is once its under 9%. We say finances over FICO. If you could list out the accounts you have. Then we can help you with a plan to get a hold of things.
Creditor/Credit Line/Balances/APR
I would list them out, but I made a spreadsheet with all their limits and each amount the tiers of 88%, 68%, etc., current balances and how much to pay off to get to the next tier. The highest is Costco VISA that gets our gas and groceries and that one is near its limit right now, so I would like to pay it down to 88%. The rest are lower than that. Some cards need less than $100 to get to the next tier, one can be paid off completely. I have $3000-4000 to throw at them right now and that would move the Costco Visa below 88%, the HVAC loan below 88%, 3 cards down to 68%, 1 card to 48%, and 1 card to 0.

Almost all cards are at 0% right now, so most payments are all principle and we usually pay more than minimum payment, but all those payments are killing our budget, so we would like to refinance them into something for a smaller payment. We've been planning that since last fall as our family expenses have increased substantially (life insurance policy monthly payment went from $40 to almost $400, car insurance more than doubled, not to mention the increase in gas and groceries prices). We haven't taken a vacation since 2018, and never eat out, but we have kids with food allergies, so that impacts the grocery bill. I'm hoping once our scores come back up, we can shop around for better insurance.

Last summer, our FICO 8 scores were at the mid-700s, now they are below 700. We saw a huge drop when we took out the loan for the HVAC. That balance has barely budged, we still owe $7300 out of $7500 after 7 payments. It's a horrible loan. I assume it's being reported more like a credit card, not something like a car loan. So I'm thinking making a principal only payment to get it to 88% would help.

1. Installment loans don't get reported as credit cards.

2. So work on getting each credit card account down. The most important tiers are below 50% and below 30%.

Re: Utilization question

ccquest — Wed, 23 Feb 2022 15:22:58 GMT

Just going to reiterate a point that's been made a few times here, your score doesn't matter unless you're actively seeking new credit. You shouldn't be actively seeking new credit at this point because it's sounding like you're in an uncomfortable debt position already and need to just focus on maximizing the effects of the money you do use to pay down the debt - focus on whatever is the highest rate and snowball from there.

Re: Utilization question

ronniejr — Wed, 23 Feb 2022 17:45:22 GMT

I just paid off all my CCs and literally one month my scores skyrocketed

EX 690--->790,
EQ 682 --> 794

TU 700 --> ? Not yet

paid off my AMEX ($1000 to $2.00) and Care Credit ($7000 to $1.00). So basically total available credit is 7997 out of 8000.

Re: Utilization question

Red1Blue — Wed, 23 Feb 2022 17:59:44 GMT

Congratulations @ronniejr

Re: Utilization question

ronniejr — Wed, 23 Feb 2022 18:13:31 GMT

Thankyou. I am 51 and don't own a car or house. Literally I rent a space to live in my tent and ride a bike. Total sacrifice but now I am looking at a small motor home!

@Red1Blue wrote:
Congratulations @ronniejr

Re: Utilization question

FireMedic1 — Sun, 06 Mar 2022 23:50:20 GMT

@AnonymousAfter reading some more. Quit using your cards all together until they are paid way down. Your paying interest on groceries. Bad enough the price of foods isnt going down anytime soon. Interest is for emergencies.

Re: Utilization question

CreditInspired — Mon, 07 Mar 2022 11:32:55 GMT

@ronniejr wrote:
I just paid off all my CCs and literally one month my scores skyrocketed
EX 690--->790,
EQ 682 --> 794
TU 700 --> ? Not yet

paid off my AMEX ($1000 to $2.00) and Care Credit ($7000 to $1.00). So basically total available credit is 7997 out of 8000.

Kudos to you!!!

Re: Utilization question

SouthJamaica — Mon, 07 Mar 2022 22:17:43 GMT

@ronniejr wrote:
I just paid off all my CCs and literally one month my scores skyrocketed
EX 690--->790,
EQ 682 --> 794
TU 700 --> ? Not yet

paid off my AMEX ($1000 to $2.00) and Care Credit ($7000 to $1.00). So basically total available credit is 7997 out of 8000.

Congratulations.

Re: Utilization question

SleeplessinMA — Tue, 08 Mar 2022 14:55:59 GMT

@ronniejr

Congratulations!

Re: Utilization question

Anonymous — Wed, 16 Mar 2022 11:21:55 GMT

Congrats!! tThat is quite a jump.

I gather that this is also a result of having a mature CC profile with no inquiries, no new recent accounts, no derogs, no late payments, and no high loan amounts. This is important for us to keep in mind so they can temper our expectations when we PIF our CCs. These other variables factor in how much of an increase we should expect.

Re: Utilization question

Ethan0vegano — Wed, 27 Jul 2022 19:42:53 GMT

Hi South Jamaica,

Regarding your reply to the original post, you concluded with this observation & recommendation,

.. whereas properly placed payments to credit card accounts could work wonders, depending on what's in your profile.

With that approach also in my mind, do you have any opinion on Bright and Gauss specifically & other similar credit professionals?

Re: Utilization question

SouthJamaica — Wed, 27 Jul 2022 20:40:00 GMT

@Ethan0vegano wrote:
Hi South Jamaica,
Regarding your reply to the original post, you concluded with this observation & recommendation,

.. whereas properly placed payments to credit card accounts could work wonders, depending on what's in your profile.

With that approach also in my mind, do you have any opinion on Bright and Gauss specifically & other similar credit professionals?

Sorry, I don't know what you mean

Re: Utilization question

RSX — Wed, 27 Jul 2022 20:48:15 GMT

i am guessing you want to maximize your score by paying down CC amounts - so that you can get a better loan to deal with all your debt - which will also lower your monthly cost for all debt

so - spread the payments across them all to get them under 87% - and anything you can get under 67% as well and the one you think you can fully payoff

then - don't use those CC's at all

wait 1-2 months and when your score bumps over 700, then get a consolidation loan for all your debt

then start crushing the payments on that one loan

good luck to you