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3000 to pay off either personal loan to CC balance

rollerkosh
Established Member

3000 to pay off either personal loan to CC balance

I have $3000 to pay off a maxed out 2 CC at 3000  (1500 each) or pay off a personal loan whose monthly payment is higher than the CC. Which is the better option. I know that my credit score will improve much more by paying off the CC balance to 0 compared to the personal loan but then if I pay the personal loan off I get more funds per month which I could apply to the credit card. 

 

Another Question related ot this part is that if I pay off the CC Balance (Its a capital one card and an amex card) will it subsequently allow for me to request a CLI on them, increase the Limit and further increase my score in the long run which will allow me to refinance the personal loan to get a better rate.

Message 1 of 9
8 REPLIES 8
nevertooldtolearn
Frequent Contributor

Re: 3000 to pay off either personal loan to CC balance


@rollerkosh wrote:

I have $3000 to pay off a maxed out 2 CC at 3000  (1500 each) or pay off a personal loan whose monthly payment is higher than the CC. Which is the better option. I know that my credit score will improve much more by paying off the CC balance to 0 compared to the personal loan but then if I pay the personal loan off I get more funds per month which I could apply to the credit card. 

 

Another Question related ot this part is that if I pay off the CC Balance (Its a capital one card and an amex card) will it subsequently allow for me to request a CLI on them, increase the Limit and further increase my score in the long run which will allow me to refinance the personal loan to get a better rate.


 

 

I personally would "spread" the wealth..

 

1k each to CC

1k to loan

 

the reason is you will get a good "bump" from each being under 100% and even though at the moment your min payment on loan won't go down (your CCs will) it will show as all under the dreded 100% and with the score bump you could posiably CLI and refi loan

"Your past is the doorway to your future"

Dad's words of wisdom

Message 2 of 9
rollerkosh
Established Member

Re: 3000 to pay off either personal loan to CC balance

Thanks, Wouldnt it be prudent to have at least one of the cards at 0 and the other at less than 30%?

Message 3 of 9
nevertooldtolearn
Frequent Contributor

Re: 3000 to pay off either personal loan to CC balance


@rollerkosh wrote:

Thanks, Wouldnt it be prudent to have at least one of the cards at 0 and the other at less than 30%?


 

 

at 1500 CL if you can get them both to 29% would be a great score bump (with a 1.1k pymt each) and of course one at 0% and other at 29% or less would be even better, but the crux is your instalment loan...you need to get that under 80% if you can, if it's showing a balance of 80% or higher it can keep you score down even if you pay both CCs off (have one show 9% for optimal)

 

for good score bump:

 

Pay each CC 11 hundred

Pay instalment the remaining 800 hundred (that takes it under 79% if loan/bal is 3k)

 

if you have any baddies this can affect, but you should see a good size bump... from what iI have learned here the big bumps are when you get your UTIs under

 

79%

59%

29%

9%

 

and if you can always pay at least 2x min on CCs if you can't PIF

 

and if you get these down and keep down (not knowing how long you have been at max on CCs) you should be able to get decent CLIs for your cards, just let them post at the end of Jun before you request and the same with refi'ng the loan

 

Best Wishes ! Smiley Happy

 

 

"Your past is the doorway to your future"

Dad's words of wisdom

Message 4 of 9
rollerkosh
Established Member

Re: 3000 to pay off either personal loan to CC balance

whats the significance of under 79% for installment loan?

Message 5 of 9
Revelate
Moderator Emeritus

Re: 3000 to pay off either personal loan to CC balance


@rollerkosh wrote:

whats the significance of under 79% for installment loan?


Alleged higher breakpoint for installment utilization if that's your only installment loan.  FWIW on my file it was worth 6 points, know the breakpoint exists but couldn't tell you what it was specifically and I don't think we ever really nailed it down (or at least confirmed it).

 

The big question is what is your APR on the cards vs. the installment loan.

 

If you have to carry debt for any amount of time, do it on the lower APR... payment amount is a red herring.  For example if your two CC's are at 20% and your loan is at 10%, pay off the CC's and use the extra money freed up from interest payments to pay down the loan quicker.  Short-term FICO optimization (and you'll get more by paying off the credit cards if you're looking for that than playing with the installment loan) is less important than financial health, and what's best financially is to pay off the highest APR debt.

 




        
Message 6 of 9
Thomas_Thumb
Senior Contributor

Re: 3000 to pay off either personal loan to CC balance


@nevertooldtolearn wrote:

@rollerkosh wrote:

Thanks, Wouldnt it be prudent to have at least one of the cards at 0 and the other at less than 30%?


 

 

at 1500 CL if you can get them both to 29% would be a great score bump (with a 1.1k pymt each) and of course one at 0% and other at 29% or less would be even better, but the crux is your instalment loan...you need to get that under 80% if you can, if it's showing a balance of 80% or higher it can keep you score down even if you pay both CCs off (have one show 9% for optimal)

 

for good score bump:

 

Pay each CC 11 hundred

Pay instalment the remaining 800 hundred (that takes it under 79% if loan/bal is 3k)

 

if you have any baddies this can affect, but you should see a good size bump... from what iI have learned here the big bumps are when you get your UTIs under

 

79%

59%

29%

9%

 

and if you can always pay at least 2x min on CCs if you can't PIF

 

and if you get these down and keep down (not knowing how long you have been at max on CCs) you should be able to get decent CLIs for your cards, just let them post at the end of Jun before you request and the same with refi'ng the loan

 

Best Wishes ! Smiley Happy

 


For revolving credit utilization the breakpoints for Fico 8 score as I see them are:

 

Under 89% (go above this and you are in max out territory can be a big hit to score especially for aggregate utilization

Under 69%

Under 49%

Under 29%

Under 9% (this is an important one for aggregate utilization)

 

On an individual card basis, impact of breakpoints on score appear to be scorecard dependent. The various breakpoints may still exist but not influence score when crossed.

 

For installment loans some say there is an upper breakpoint for balance to loan ratio at 79% while others (such as me) believe one exists at 69%. For a mortgage only profile, some posters mention seeing score increases when B/L drops below 95% or 90%. Breakpoints for mortgages are a bit of a moot point as most follow an established payment plan.

 

As mentioned above, tackle outstanding loans that have the highest APR 1st. If those happen to be credit cards paydown of aggregate utilization will have a greater positive impact on score than paying down high aggregate B/L on installment loans. For example:

1) Going from a 90% aggregate utilization on revolving accounts to under 9% may be worth 100 points

2) Going from 90% aggregate B/L on installment loans to under 9% B/L probably won't be worth more than 30 points.

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 7 of 9
nevertooldtolearn
Frequent Contributor

Re: 3000 to pay off either personal loan to CC balance


@Thomas_Thumb wrote:

@nevertooldtolearn wrote:

@rollerkosh wrote:

Thanks, Wouldnt it be prudent to have at least one of the cards at 0 and the other at less than 30%?


 

 

at 1500 CL if you can get them both to 29% would be a great score bump (with a 1.1k pymt each) and of course one at 0% and other at 29% or less would be even better, but the crux is your instalment loan...you need to get that under 80% if you can, if it's showing a balance of 80% or higher it can keep you score down even if you pay both CCs off (have one show 9% for optimal)

 

for good score bump:

 

Pay each CC 11 hundred

Pay instalment the remaining 800 hundred (that takes it under 79% if loan/bal is 3k)

 

if you have any baddies this can affect, but you should see a good size bump... from what iI have learned here the big bumps are when you get your UTIs under

 

79%

59%

29%

9%

 

and if you can always pay at least 2x min on CCs if you can't PIF

 

and if you get these down and keep down (not knowing how long you have been at max on CCs) you should be able to get decent CLIs for your cards, just let them post at the end of Jun before you request and the same with refi'ng the loan

 

Best Wishes ! Smiley Happy

 


For revolving credit utilization the breakpoints for Fico 8 score as I see them are:

 

Under 89% (go above this and you are in max out territory can be a big hit to score especially for aggregate utilization

Under 69%

Under 49%

Under 29%

Under 9% (this is an important one for aggregate utilization)

 

On an individual card basis, impact of breakpoints on score appear to be scorecard dependent. The various breakpoints may still exist but not influence score when crossed.

 

For installment loans some say there is an upper breakpoint for balance to loan ratio at 79% while others (such as me) believe one exists at 69%. For a mortgage only profile, some posters mention seeing score increases when B/L drops below 95% or 90%. Breakpoints for mortgages are a bit of a moot point as most follow an established payment plan.

 

As mentioned above, tackle outstanding loans that have the highest APR 1st. If those happen to be credit cards paydown of aggregate utilization will have a greater positive impact on score than paying down high aggregate B/L on installment loans. For example:

1) Going from a 90% aggregate utilization on revolving accounts to under 9% may be worth 100 points

2) Going from 90% aggregate B/L on installment loans to under 9% B/L probably won't be worth more than 30 points.


 

 

What he said Smiley Happy

 

"I stand corrected" (smiling)
 

"Your past is the doorway to your future"

Dad's words of wisdom

Message 8 of 9
SouthJamaica
Super Contributor

Re: 3000 to pay off either personal loan to CC balance


@rollerkosh wrote:

I have $3000 to pay off a maxed out 2 CC at 3000  (1500 each) or pay off a personal loan whose monthly payment is higher than the CC. Which is the better option. I know that my credit score will improve much more by paying off the CC balance to 0 compared to the personal loan but then if I pay the personal loan off I get more funds per month which I could apply to the credit card. 

 

Another Question related ot this part is that if I pay off the CC Balance (Its a capital one card and an amex card) will it subsequently allow for me to request a CLI on them, increase the Limit and further increase my score in the long run which will allow me to refinance the personal loan to get a better rate.


It depends what your goal is:

 

(a) short term score improvement, or

(b) saving money.


Total revolving limits 677500 (584500 reporting) FICO 8: EQ 757 TU 776 EX 749

Message 9 of 9
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