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BT / Utilization / FICO Questions!

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Anonymous
Not applicable

BT / Utilization / FICO Questions!

Overview:

I'm in the process of paying down a significant amount of debt. With my next payment, I will be able to take my overall CC utilization from 99% to approximately 33% (combination of savings + bonus). My question is about how to best approach paying down individual cards.

 

Consider:

1. Interest rates range from 25.9% to 14.9%.

2. My goals here are two-fold: 1. Pay down debt. 2. Raise my FICO score. (Remaining cc debt will be consolidated on a 0% BT Card)

3. My FICO scores are estimated to jump to mid 700s after this payment (according to MyFico Simulator -- util is the only thing hurting me right now.)

 

Questions:

1. Do I pay ALL balances to approx 33%?

2. OR, do I pay off highest interest cards first and leave higher balances (and thus, utilization) on lower interest credit cards?

3. Since I will be looking to open up a 0% BT card one month after this payment, what would be the most advantageous approach for my FICO score? (It's my understanding that utilization is calculated per individual card, so ANY card > 29% utilization hurts me.) 

4. Additionally, I should qualify for the 3X CLI on my AmEx, after payment. (Currently, $6k limit, should become $18k, which would also bring total CC util under 29% post payment.)

5. Any insight on the best 0% BT card (ideally one with high SL?)

 

FWIW, debt is due to business expenses, not personal ignorance. (Never finance a startup on a CC, but you guys already knew that. I've since closed my business and was hired by a great company last summer.)

8 REPLIES 8
Kforce
Valued Contributor

Re: BT / Utilization / FICO Questions!

All depends on information that you have not provided.

Most here need to see a full list of cards with ( Money Owed / Total CL / Rate / Age / Time @ high Uti), other loans, (cars, mortgage, student,etc). This would help a great deal with giving better advice. If your utility has been maxed for many months, there is a good chance with some lenders to start "balance chasing".  If this occurs all  theory of how to pay who first will crumble, along with fico and getting a 0 interest balance transfer card . More info will let some my-fico experts give you odds of this happening or not. Without knowing more I would say, pay the highest interest card with all that you can. This will save money if "balance chasing" occurs, and the dominoes start to fall.

 

Message 2 of 9
Anonymous
Not applicable

Re: BT / Utilization / FICO Questions!

It's my understanding that utilization is calculated per individual card, so ANY card > 29% utilization hurts me.) 

 

How very many cards are like that? how much do you have to work extra extra to bring them down to 29% util or better.

Why would you not pay it down completely to zero if you still can?

96% card bal  + 0% card bal divided by 2 is still 48% irrespective of credit limits? am i right? 

if it were 4 cards with 90% card balance ? and 5 other cards with 0 balance reporting? whats Util? 

 

eg:

FirstTech $9872/$10k limit (97% Util)
Discover $ 2489/$2500 limit (96% util)

Sams MC $600/$12000 limit (4% Util)

Lowes card $2100/$6000 limit (35%)
Cap1 QS $2.00/$3000 limit (0%)

Merrick Bank Secure card $228/$350 limit (66%)

Kohls  $0/$300 limit (0%)

PPal Credit ($2300/$2500)

Whats my Util? someone tell me if i m doing this right?

Need one B/T card with $6000 to transfer PPal Credit + Lowes + Sams + Discover (0%Apr4Purchases upto 6 mos).

 

Will love 2 make it two B/T cards to pay for? FirstTech/NewCard thats it!!!!! At 0% APr for 12 mos no b/t fees beginning april 2018. 

Life is Wonderful after that.

 

$3000/mo income.

 

Message 3 of 9
Anonymous
Not applicable

Re: BT / Utilization / FICO Questions!

I’d pay off the highest interest cards to save money, also your not guaranteed to get approved for a card even if you’re scores improve. So I would play it safe and avoid unnecessary interest.
Message 4 of 9
UpperNwGuy
Valued Contributor

Re: BT / Utilization / FICO Questions!

I agree with fmurad.  Forget about attempting to optimize your FICO score for the time being.  Instead, work hard to pay down the balances on your existing cards starting with the ones with the highest interest rates. Once that is done, your FICO scores will start to rise.

Daily Carry: PenFed Power Cash • NFCU Flagship • NFCU More Rewards • Chase Freedom
Sock Drawer: PenFed Promise • NFCU cashRewards • Chase Sapphire Preferred • Chase Freedom Unlimited • United Explorer • UNFCU Azure
Message 5 of 9
Anonymous
Not applicable

Re: BT / Utilization / FICO Questions!

 

Highest Interest cards? where r they?

 

All i need is another 0% APr Slate or WF cash visa with a $6000+ limit to give me 12 mos of b/t at 0% and all will be paid before the year end (within 10 months ) and there will be no cards with balances.

 

Any n all card uses will be PIF monthly until the big balances are paidoff.

29% of $6200 = upto $1800 bal allowed on card wF visa

29% of $ 9872 = upto $2900 bal allowed on FirstTech Visa.

 

Once this cards r paidoff i will have a Low APR card for use with high credit limits.

My plan B is for my DW to get 0% APR 12 mos b/t card next Jan 2019 (which she qualifies for) and start with remaining balance (for 12 more mos at 0% apr).

 

Better than taking out a personal loan with Lendingclub or Avant or sofi etc etc.

Message 6 of 9
K-in-Boston
Epic Contributor

Re: BT / Utilization / FICO Questions!

The typical cards that people often open for balance transfers (Chase Slate, Bank of America BankAmericard, Citi Diamond Preferred, etc.) would be very unlikely to give you the starting line you're looking for when viewing the limits on your major lender bank cards.  I'm not sure how you're getting 99% utilization, though.  Running the math really quickly through that list of cards and balances, it looks like you're at under 50% overall. 

 

I'd certainly look at all of your store cards that have 0% promotional purchases first before making payments elsewhere.  Those usually have 6,12 or 24 month 0% APR offers, but if they're not paid off before expiration you pay interest (usually 25+%) retroactively to the date of purchase.  So certainly pay those before you're hit with possibly hundreds of dollars in interest that you wouldn't have to pay by paying off those charges prior to expiration.  After that, I'd concentrate on making sure no card was above 89% utilization (that's a red flag to lenders), then simply figure out which card has the highest interest rate and pay as much as possible until it's paid off, then continue to the next one.  It'll still take at least a month before all of those new, lower balances get reported to the credit bureaus, but then you can evaluate your scores and decide if a balance transfer card may make sense for the remainder of the balances.  Keep in mind that "what if" scenarios with credit scoring sites are just best guesses.  It's also quite possible you may see only small gains by paying your cards down to under 30% - every credit profile is different.

Message 7 of 9
Meanmchine
Super Contributor

Re: BT / Utilization / FICO Questions!

For FICO scoring, make sure you have more accounts at $0 then the number of those reporting any balance.

>3/2016 EX 644 CK-TU 642 CK-EQ 660 WalMart- 671.
>5/2025 All 3 reports 845 - 850(F8) F9s = all 850 but my app finger is still twitching
Message 8 of 9
Anonymous
Not applicable

Re: BT / Utilization / FICO Questions!

I'm not sure how you're getting 99% utilization, though;

 

I m only counting individual cards utilization hence 99%

 

FirstTechFed has 99% util.

 

Assuming I get approved for $ 6500 credit limit WF Visa on my GRandma's Credit lets say (it cant be my Credit)

 then I move balances over from Lowes ($2200) + PayPalCredit ($2300) + Discover ($2300). which totals ~ $ 6200. I will be responsible for paying off WF Visa card on my grandma's credit and yes i will payoff. for sure.

those small chump change on Merrick ($228) and $ 2 on cap1 gets paid before it reports to credit bureaus.

 

So now i have

First tech : balance $9287 at 0% APR until Jan 11, 2019

WF Visa : balance $ 6200 or thereabouts at 0% APR until March 2019.

No other card has any balances whatsoever ;

So i m paying the minimum on these 2 cards (FirstTech & WF Visa) then adding as much as i can on top of it to bring each balance down to near 30% or less. (while still at 0% apr).

 

Now, in my worst case scenario, i m unable to pay it off before my deadlines i have my DW (other than Grandma)

a) Apply and be approved for 0% APR for 12/18 months Slate/wF/Citi/FifthThird/Discover available to me.

b) given DW credit, thats very much a reality, will get approved.

 

So its a security blanket i m betting on should the unforeseen happen and i m unable to payoff two credit cards with 0% APR. Remember also, one chase card to another or one wells fargo to another isnt allowed. so knowing its WF visa & FirstTech the new card has to be Slate/Citi/BofA etc etc.

 

I think this works for me in my own INDIVIDUAL CASE. not everyone is or will it work for. i m just laying it out as to another way of getting 22+ months of 0% apr interest rate without having to apply thru Lending Tree or Marcus Loans or sofi.

Downfall is WF visa gets Denied or for lesser limit and this whole plan will not work. who knows. hoping for the best.

if all works out, i will be gardening for a very long time. lol

 

Just my own 2 cents on it.

Message 9 of 9
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