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Advice to lower utilization

New Visitor

Advice to lower utilization

I am looking to reduce my utilization on CC's as well as reduce overall debt in an effort to increase my Fico scores. 

My overall utilization is 67.6% on 6 cards. 

  • Citi Simplicity = Balance $2880, Util 60%, Interest Rate 22.24%
  • Citi Diamond = Balance $2385, Util 41% interest Rate 18.24%
  • Discover It = Balance $1,523.34, Util 12% interest Rate 0% until 8/2018
  • BofA Rewards = Balance $14,392, Util 89% Interest Rate 21.24%
  • Chase Amazon = Balance $10461, Util 90.9% Interest Rate 14.49%
  • Case Slate = Balance $9,567, Util 92.8% Interest rate 16.495 ( my limit on this card was lowered to $10,300 last month after i had been paying it down) 
  •  

I have some funds available to pay down some balances. My thought is to bring down my three high balance, High utilization cards down to under 80% utilization the I would have enough left to pay down to $0 the Citi Simplicity card and a portion of the City Diamond Card both with higher Rates. Then snowball those to the BofA card 

 

I have a budget of $1,100 a month to pay down my cards after this so I want to do both, improve overall credit score and get on a good path to lower debt. 

 

To help improve my credit score near term, would it be better to do it as I stated above or just pay off the three low balance cards and snowball those into my other cards.

 

Message 1 of 8
7 REPLIES
Super Contributor

Re: Advice to lower utilization


@Lisn2mewrote:

I am looking to reduce my utilization on CC's as well as reduce overall debt in an effort to increase my Fico scores. 

My overall utilization is 67.6% on 6 cards. 

  • Citi Simplicity = Balance $2880, Util 60%, Interest Rate 22.24%
  • Citi Diamond = Balance $2385, Util 41% interest Rate 18.24%
  • Discover It = Balance $1,523.34, Util 12% interest Rate 0% until 8/2018
  • BofA Rewards = Balance $14,392, Util 89% Interest Rate 21.24%
  • Chase Amazon = Balance $10461, Util 90.9% Interest Rate 14.49%
  • Case Slate = Balance $9,567, Util 92.8% Interest rate 16.495 ( my limit on this card was lowered to $10,300 last month after i had been paying it down) 
  •  

I have some funds available to pay down some balances. My thought is to bring down my three high balance, High utilization cards down to under 80% utilization the I would have enough left to pay down to $0 the Citi Simplicity card and a portion of the City Diamond Card both with higher Rates. Then snowball those to the BofA card 

 

I have a budget of $1,100 a month to pay down my cards after this so I want to do both, improve overall credit score and get on a good path to lower debt. 

 

To help improve my credit score near term, would it be better to do it as I stated above or just pay off the three low balance cards and snowball those into my other cards.

 


IMHO, before you pay anything down to zero, I would try to get all accounts down to below 29%.

 

 


FICO8 EQ 769 TU 791 EX 764 Total revolving limits 569900 (484900 reporting)
Message 2 of 8
Valued Contributor

Re: Advice to lower utilization

What are your scores? Is there a reason you're needing higher ones anytime soon? If not, I wouldn't even worry about it. I would pay off the Simplicity since it's the highest interest rate and then get hammering on the BOA. If you wanted another account off of your list, you could pay off the Diamond before tackling the BOA.

 

If Chase really is balance chasing you, I wouldn't worry about paying them down yet . .both for this reason and for the fact they are some of your lower interest rates. When they see debt lowering on your other cards, they might be less likely to balance chase you when you start paying them down.

Ch 7 Discharge May 2015
Discover/Target/NFCU CLOC/NFCU Cash Rewards/PenFed Power Cash Rewards/PenFed Pathfinder AMEX - $60k total revolving
Message 3 of 8
New Visitor

Re: Advice to lower utilization


@SteelerNYCwrote:

What are your scores? Is there a reason you're needing higher ones anytime soon? If not, I wouldn't even worry about it. I would pay off the Simplicity since it's the highest interest rate and then get hammering on the BOA. If you wanted another account off of your list, you could pay off the Diamond before tackling the BOA.

 

If Chase really is balance chasing you, I wouldn't worry about paying them down yet . .both for this reason and for the fact they are some of your lower interest rates. When they see debt lowering on your other cards, they might be less likely to balance chase you when you start paying them down.


Current Scores are 723 to 731,   In June I finish paying of our only open car loan but really need another reliable vehicle, so once we pay the van off I want to get a used car loan ($10 to 12K)  so I am looking try and bring up my scores slightly before then.  

 

I have not preference on how I pay them down. but would like to hit the High Rate cards, but wasn't sure if getting specific cards below 80% while reducing my overall utilization would give me any instant bump in my Credit scores.  More long term I will want to hammer the BoA card with a **bleep** interest rate. 

Message 4 of 8
New Contributor

Re: Advice to lower utilization

List them out from smallest to largest balance, and start with the smallest first. Knock that one out, then apply that ones payment to the next lowest balance, and on down the line. Ramsey debt snowball method. BTW Id close the accounts as you pay them off. It is absolute financial suicide to keep debt instruments with ridiculously high interest rates like credit cards. Especially when you can't PIF, which you are not able to do from your history. Free up your cash flow. It should bother you that you have like 15 payments a month and youre making the banks rich while reducing your balances minimally. I would also say no car for you now. You are drowning in like 60K of credit card debt. Getting more debt is just a bad idea. Spend a year paying off ALL of the cards, free up massive cash flow and then you can buy any car you want. And buy it with cash preferably.

Message 5 of 8
Valued Contributor

Re: Advice to lower utilization


@Lisn2mewrote:

@SteelerNYCwrote:

What are your scores? Is there a reason you're needing higher ones anytime soon? If not, I wouldn't even worry about it. I would pay off the Simplicity since it's the highest interest rate and then get hammering on the BOA. If you wanted another account off of your list, you could pay off the Diamond before tackling the BOA.

 

If Chase really is balance chasing you, I wouldn't worry about paying them down yet . .both for this reason and for the fact they are some of your lower interest rates. When they see debt lowering on your other cards, they might be less likely to balance chase you when you start paying them down.


Current Scores are 723 to 731,   In June I finish paying of our only open car loan but really need another reliable vehicle, so once we pay the van off I want to get a used car loan ($10 to 12K)  so I am looking try and bring up my scores slightly before then.  

 

I have not preference on how I pay them down. but would like to hit the High Rate cards, but wasn't sure if getting specific cards below 80% while reducing my overall utilization would give me any instant bump in my Credit scores.  More long term I will want to hammer the BoA card with a **bleep** interest rate. 


I think the kind of loan you want (with a good rate) is no problem with your current scores, so I still wouldn't stress the fico points and would just pick whatever paydown method worked for me personally.

 

I'd really try to stretch out buying another car if possible and hammer on these debts while you're payment free. Baby the old vehicle, share rides, uber, etc. Getting creative and pushing that new purchase out could really help in paying off your debt.

Ch 7 Discharge May 2015
Discover/Target/NFCU CLOC/NFCU Cash Rewards/PenFed Power Cash Rewards/PenFed Pathfinder AMEX - $60k total revolving
Message 6 of 8
Regular Contributor

Re: Advice to lower utilization

IME when you have been carrying a high balance on all your cards, paying one down at a time doesn’t really help much. For me when I went from 95% to around 60% I saw a jump of around 20-30 points. When I got them down under 40% it was another big jump. This is in a matter of 3-4 months mind you. I am unsure what the result would be if you went from 95% to under 40%. Of course the main set back is, if you keep paying them down and don’t use them, once you carry a new balance on just 1 card it can lower your score 15-20 points. When I was paying them down I had a car repair I needed to finance and put it on the card. Those points were easily lost just by using that card for that one month. When I paid it back down to 8%,it took about 2-3 months at 8% to really make a difference.
Message 7 of 8
Super Contributor

Re: Advice to lower utilization

When you're talking > $40k in CC debt, IMO the least of your worries are your current credit scores and/or improving them.  Priority #1 needs to be paying down that debt.  The scores will come, regardless of where you're paying the debt down.  If you can afford $1000/mo to pay toward the debt, find a way to increase that number.  At $1000/mo, more than half of what you're paying is going toward interest.  Look at your expenses and see where you can cut back.  Maybe there are things you can do without to generate more funds to pay toward your debt.

Message 8 of 8