topic Re: high utilization... in Rebuilding Your Credit

high utilization...

Anonymous — Thu, 13 Mar 2014 22:38:08 GMT

I know high utilization affects your credit score big time and of course my two cards are close to the spending limit. I dont have any extra money to pay anything other than the minimum payment but I really want to apply for a home loan in a couple months and I'd like to get that down. Is there any other option for me? If I paid more than my minimum payment than I'd get behind on some bills and dont really want to have to play catch up like that. I thought about taking a small loan out of my 403K to try and get it down a little so that if I made a few big payments it might look better than paying the minimum payment. I'm not really sure what I can do. I just applied for a bunch of balance transfer cards and was denied and that impacted my score as well

Re: high utilization...

gdale6 — Thu, 13 Mar 2014 22:56:19 GMT

@Anonymous wrote:
I know high utilization affects your credit score big time and of course my two cards are close to the spending limit. I dont have any extra money to pay anything other than the minimum payment but I really want to apply for a home loan in a couple months and I'd like to get that down. Is there any other option for me? If I paid more than my minimum payment than I'd get behind on some bills and dont really want to have to play catch up like that. I thought about taking a small loan out of my 403K to try and get it down a little so that if I made a few big payments it might look better than paying the minimum payment. I'm not really sure what I can do. I just applied for a bunch of balance transfer cards and was denied and that impacted my score as well

One would never take retirement money and put it on credit cards for any reason. If you cannot handle your credit card payments now how do you expect to handle a house payment, its more than just principle, interest, insurance and taxes you need to be able to afford several hundreds of dollars in repairs every month even though nothing may go wrong right away. IMO you are not in any position to purchase a home and I would be looking to increase income to pay off those cards. Good luck

Re: high utilization...

Anonymous — Thu, 13 Mar 2014 23:31:45 GMT

well one of the reasons I am not able to save more to pay off credit cards is because my rent is too much which is why I want to buy.... if I can buy a home with a payment less than my rent costs each month I will be able to pay down my credit cards more.

Re: high utilization...

Anonymous — Thu, 13 Mar 2014 23:34:17 GMT

I also know a couple people I work with who took a loan out of there 403K to pay for things when they had a baby or buy a home etc and it just gets taken out of your paycheck each month to pay back so whats the big deal? It's being paid back...

Re: high utilization...

Anonymous — Thu, 13 Mar 2014 23:37:02 GMT

Sorry for the multiple posts... but really did I say I cant make my credit card payments? No I said I pay the minimum payment each month, never late and my payment history is rated A

Re: high utilization...

gdale6 — Fri, 14 Mar 2014 00:04:08 GMT

@Anonymous wrote:
I know high utilization affects your credit score big time and of course my two cards are close to the spending limit. I dont have any extra money to pay anything other than the minimum payment but I really want to apply for a home loan in a couple months and I'd like to get that down. Is there any other option for me? If I paid more than my minimum payment than I'd get behind on some bills and dont really want to have to play catch up like that. I thought about taking a small loan out of my 403K to try and get it down a little so that if I made a few big payments it might look better than paying the minimum payment. I'm not really sure what I can do. I just applied for a bunch of balance transfer cards and was denied and that impacted my score as well

My analysis is from your own words, sorry but that is what it is IMO, someone else may have a different idea for you. I call it as I see it.

Re: high utilization...

mebell — Fri, 14 Mar 2014 01:06:18 GMT

All you can really do is pay what you can afford. Make sure you have the control to not use the cards then until they are carrying low balances. So if you have high balances and can only pay the minimum, you might have a suffering score for a little bit, but keep in mind the UTL is the easiest way to increase your score. A high balance yesterday will not affect a low balance today in scoring. It is a snapshot. So just pay down what you can and don't use the cards. ALso, if you are looking into a home mortgage anytime soon you should not app for new cards. They don't like to see HP on CRs. Good luck!

Re: high utilization...

Tdbremer — Fri, 14 Mar 2014 01:26:21 GMT

OP, don't get discouraged by others opinions. Only you know where you stand when it comes to a home purchase. I understand what you mean with high rent vs mortgage payments. It's much smarter to buy. My mortgage payment is cheaper than any rent I paid. Pay what you can and put the cards in a drawer. Good luck!!!

Re: high utilization...

Anonymous — Fri, 14 Mar 2014 03:08:37 GMT

I agree with Tdbremer. Don't get discouraged by others opinions.

You need to do what you feel is right.

Re: high utilization...

trc1962 — Fri, 14 Mar 2014 05:14:11 GMT

I understand what you are talking about - rent is very high where I liveas well. Maybe you might have some things to sell to throw at the credit card balances? Maybe not a great answer, but I have heard of others who do this and get some clutter gone and get a little ahead. Just an idea though!

Re: high utilization...

Melanie220 — Fri, 14 Mar 2014 22:08:28 GMT

I've borrowed money from my 403b to pay off debt before. Idk what the big deal is! I paid off a few credit card and student loans with money that belonged to me and paid myself back with interest (which was lower than the interest rate on my cc and sl) if this is an option that you have and you don't mind paying back a few bucks every pay period, I'd say go for it!! Good luck!

Re: high utilization...

virgo — Fri, 14 Mar 2014 22:22:53 GMT

Unless you plan on retiring tomorrow, I dont see that it is a big deal either. Borrowing from your 403 may just be the edge you need. IMO.