My husband and I are aiming for a 700 plus score within the next few months (his parents put most of his debt on 1.9 percent Discover card of theirs). I assume because his credit is about 633 now, it should get him up to 700 or so. He has great credit other than his former high utilization and about a 14 year history.
All my debt will be gone with the sale of our home. (we had people come look for the second time today...eeks..hope it sells soon!) My scores are in low 630s right now. (I have a discharged bankruptcy in 2003). Most of my stuff - about 6 accounts- are scheduled to start dropping from my report beginning 11/08 to 6/09. Other than that, I have no lates. My credit history is about 16 years.
Once we have all this done, we are going to get on each others cards as JOINT owners - so that will increase the available credit limit on paper.
Here's our dilemna. We would like to pay his parents back and there are a couple of choices. I want to be smart for once.
1. Do we buy a home with equity in it and just get a HELOC to pay them back (it will be roughly 36k) and the interest rate - not sure? 6.5-9 percent?
2. Do we try to get a few 0 percent credit cards with low aprs after that and put the debt on 1-2 high limit cards?
3. Or do we aim for the AMEX blue card with 5 percent cash back with a 36k balance transfer? Does Amex just go by credit scores or income or both?
1) This option won't work. You can't buy a home with equity already in it unless you put a down payment on it (which negates the advantage of a HELOC), or if the house rises in value. That's not likely in this evironment. And HELOC's are getting a lot of scrutiny these days.
2) I would not take out added debt on CC's to pay off your in laws. That's just getting on another treadmill.
3) Forget AMEX, they are not BK friendly and would not probably give a brand new card holder a low BT rate for $36k anyway. Even if they did it just puts you on the debt merry-go-round.
After selling the house I would buckle down and start paying your in laws back out of your income. $120k a year is pretty good coin and you should be able to knock back a fair amount each month and whittle that $36k down. Do you have an oral agreement with your in laws that you will be paying this money back? Or is it a gift? Eventually the 1.9% BT rate on their account will probably run out. Then what?
Your solution is NOT in getting more credit extended to you, rather it is tackling the existing debt you owe and pay that back.