Strategy Advice, 80% UTIL

Grape · ‎03-19-2009

Want to start by thanking everyone who contributes to this board - a ton of great 411 on here. I am looking for some advice on my best strategy for getting my util. low (this is the primary item affecting my FICO scores).

To start, my current scores as of three days ago (my FICO for TU and EQ, FicoPlus for EX)

TU 667

EQ 653

EX 663

Negative Items affecting score: 1 CA that was paid in full about 4 years ago, DOFD was March, 2004.

1 30-Day late from 3.5 years ago (acct now closed, I was an AU on this acct)

There was another CA acct that has fallen off...it did have a balance of about $180 and I did not expect it to be gone yet, but it is and I am not going to stir a sleeping bear.

Now, the killer here is my Util is hovering around 80%. My accts are as follows:

Acct CL Bal APR Util %

Wells Fargo $4,000 $3,800 18.9% 95%

Chase $1,000 $780 20.43% 78%

Cap One $1,000 $500 7.9% 50% (this will go to $1,500 CL and 33% Util next month)

Best Buy $2,000 $1,650 0% until 2/10 82%

Target $500 $150 19% 30%

Student Loan Remaining Bal : $880

I can afford to pay, in total, about $250-$400 towards these accts every month. I am paying off the Best Buy accordingly in order to pay off the promo balance by the expiration date. My question is, what strategy should I employ overall?

Should I look for a 0% Balance Transfer Card (I was thinking Discover More card...do people think I would be approved?)? Should I try and get a debt-consolidation loan? Should I just keep chugging away using the Snowball Effect strategy?

Any input really is appreciated. I ran these balances up (esp the Wells Fargo one) before I knew how to handly my credit. And score simulators estimate that if I pay off 90% of my balances, I can easily be in the 720+ area.

Message Edited by Grape on 03-19-2009 01:27 PM

moondog7324 · ‎03-19-2009

There are different methods- some say pay the highest interest cards down first, while making mins on others- Some say pay low balance cards down first- to get them down to zero- and work your way up.. Its up to you.

Your other option ( I DON'T RECCOMEND THIS) is to open additional LOC to get the overall util down- such as a Kays card- you should be able to get a 5G line. I think the ideal position to be in is ,10% overall with no card over 25%.

moondog7324 · ‎03-19-2009

Do you belong to a CU or does your bank offer personal LOC's? That may be an option- but you run the risk of paying them all off- and maxing them out again.

Donks3369 · ‎03-19-2009

Want to start by thanking everyone who contributes to this board - a ton of great 411 on here. I am looking for some advice on my best strategy for getting my util. low (this is the primary item affecting my FICO scores).

To start, my current scores as of three days ago (my FICO for TU and EQ, FicoPlus for EX)

TU 667

EQ 653

EX 663

Negative Items affecting score: 1 CA that was paid in full about 4 years ago, DOFD was March, 2004.

I would try to send them a GW letter to remove, it may not help your score but the report would look a little cleaner.

1 30-Day late from 3.5 years ago (acct now closed, I was an AU on this acct)

Again I would try and send a GW letter to see if they will remove.

There was another CA acct that has fallen off...it did have a balance of about $180 and I did not expect it to be gone yet, but it is and I am not going to stir a sleeping bear.

Now, the killer here is my Util is hovering around 80%. My accts are as follows:

Acct CL Bal APR Util %

Wells Fargo $4,000 $3,800 18.9% 95%

Chase $1,000 $780 20.43% 78%

Cap One $1,000 $500 7.9% 50% (this will go to $1,500 CL and 33% Util next month)

Best Buy $2,000 $1,650 0% until 2/10 82%

Target $500 $150 19% 30%

Student Loan Remaining Bal : $880

I can afford to pay, in total, about $250-$400 towards these accts every month. I am paying off the Best Buy accordingly in order to pay off the promo balance by the expiration date. My question is, what strategy should I employ overall?

Should I look for a 0% Balance Transfer Card (I was thinking Discover More card...do people think I would be approved?)? Should I try and get a debt-consolidation loan? Should I just keep chugging away using the Snowball Effect strategy?

In my opinion I wouldn't take out anymore credit and I'm not sure if you could get approved for anything with a great 0% BT rate, however others may have different answers. Debt consolidation loans can be hard to get now and I know some banks aren't even offering them. If you aren't looking for a quick score improvement I would work on chugging away at paying the balances down.

Here is where opinions differ. For score purposes I would work to get each card under 50% utilization. To save money though most people work on the highest interest rate. The third option is the snowball effect. There is no right answer but I would just work at paying these down. Do you need to improve your scores in the near future for anything?

Any input really is appreciated. I ran these balances up (esp the Wells Fargo one) before I knew how to handly my credit. And score simulators estimate that if I pay off 90% of my balances, I can easily be in the 720+ area.

Grape · ‎03-20-2009

Thanks for the responses everyone, really do appreciate it.

I have no big purchases coming up, just want to get my score up there so I can get better "prime" credit deals/rates when I do need them down the road.

Looks like chugging away at paying these down is the way to go. Guess I will start with Chase, then Cap 1 and Target, while continuing to chisel away at Best Buy. After those get down to <10% util, I will work on the big one - the Wells Fargo. If I pay the others down (minus Best Buy), my overall Util should be around 66%, much better than the 80-85% it is at now.

If anyone else has additional words of wisdom, would still love to hear it. I am still considering the personal LOC (I dont belong to a CU, but my bank does offer them) to pay off the debt with an installment loan, so any additional thoughts on that would be appreciated.

Thanks again for all the responses.

haulingthescoreup · ‎03-20-2009

Grape wrote:

If anyone else has additional words of wisdom, would still love to hear it. I am still considering the personal LOC (I dont belong to a CU, but my bank does offer them) to pay off the debt with an installment loan, so any additional thoughts on that would be appreciated.

Thanks again for all the responses.

This does work, but boy, do you have to be brutally honest with yourself as to the source of the original high CC debt, and then you have to be just as brutally accountable to yourself to not incur additional debt while you have the loan.

An awful lot of people decided to do this, ran their cards up again, and wound up with maxed-out cards and a loan that they couldn't figure how to pay off, because getting the loan let them relax again and go right back into their old ways.

For those who do pay off their cards and leave them zeroed out while paying off the loan, it's a great solution. It's quite a minefield, though, for the above psychological reasons.

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007

Anonymous · ‎03-20-2009

Grape,

You will not get approved for Discover More, your credit profile has too much hair right now. Do try to write GW letters to remove negatives.

Pay the highest APR card first and work down the list. It will not be the fastest way to improve your scores, but looking at amount you can pay each month it's not going to be a fast process anyway.

1. Chase @20.43% <-- Transfer whole balance to Capital One

2. Target @19.0%

3. Wells Fargo @18.9% <-- Transfer whole balance to Capital One

4. Capital One @7.9%

5. Best Buy @0.0%

So, right now you have $6800 at average rate of 13.74%. If you transfer indicated balances to Capital One, and effectively maximizing that card you will bring your average rate to 11.97%. That's $121 worth of savings (per year) you can put towards paying your cards! If you can pay only $400/month it's fine, but if you can allocate even $50 more you should.

Unintended effect of balance transfer is your ability to target Target card right away and pay it off within 1 month. Thus, you will have 2 paid off cards and saving money.

Good luck.

Anonymous · ‎03-20-2009

Grape wrote:

Negative Items affecting score: 1 CA that was paid in full about 4 years ago, DOFD was March, 2004.

1 30-Day late from 3.5 years ago (acct now closed, I was an AU on this acct)

There was another CA acct that has fallen off...it did have a balance of about $180 and I did not expect it to be gone yet, but it is and I am not going to stir a sleeping bear

------------------------------------------------------------------------------------------------------------------------------------------------------------------

Can't you have your name removed as AU on this card?

Message Edited by VEEnVEGAS on 03-20-2009 09:12 PM

Message Edited by VEEnVEGAS on 03-25-2009 09:02 PM

Grape · ‎03-23-2009

Thanks for the advice, everyone. It is really appreciated.

After careful consideration, I have dropped the idea of a LOC.

And I think I will tackle these with a hybrid Snowball strategy - Cap 1 and Chase in the next 60 days. Then transfer the balances from teh WF card to the Cap 1 card at either 0% for 6 months with a 3%/$50 fee or at my current rate of 7.9% with no fee. Thanks again for the help, have a strategy I am comfortable with now.

I wrote a GW to try and get a 5 year old CA removed (and just found out they agreed to delete it from my CRs! SWEET!) As for the 30-day late, as I posted in the credit repair forum, due to the age of this account, my average age of all accounts and the fact this30-day late is more than 2-years old, my score is helped more by this account than hurt by it.

Thanks again, everyone.

Message Edited by Grape on 03-23-2009 11:19 AM

Grape · ‎03-25-2009

Thanks again for everyone's advice.

I will actually have about $2000 to pay down these balances thanks to a small bonus. Would people still recco paying down Cap1, Chase and Target to 0 (about $1300) and then using $700 to pay down the Wells Fargo account and then transfer about $750 immediately from the Wells Fargo account to my lower interest Cap1 card?

This strategy would bring my util to as follows:

Wells Fargo 62.5%

Cap 1 50%

Chase 0%

Target 0%

Best Buy (80%, due to 0% interest for next 8 months or so)

Overall Util would be 54.5%

I have heard reccos to try and get every card below 50% if possible. If that is the case, should I focus more of the $2000 towards the Wells Fargo? My only concern about doing this is potentially getting a CLD.

Thanks again for all the help.

Message Edited by Grape on 03-25-2009 12:39 PM