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Help - What should I pay Down First To Improve Utilization

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FocusedOnFICO
New Member

Help - What should I pay Down First To Improve Utilization

Good morning  - I am new to this forum and need some guidance on how to "fix" some very poor judgment calls based on poor advice.  I took out several loans to try and improve my very stagnant credit score and my score continues to be stagnant.  I have the means to pay down 10k of the debt listed below but want to understand where to start first.

Current Experian FICO score: 695

List of obligations:

1. Loan 1 - $5473 left out of $8000 - opened Nov 2019 - never late - 22% interest rate
2. Loan 2 - $5652 left out of $7500 - opened Apr 2021 - never late - 30% interest rate
3. Loan 3  - $5592 left out of $6000 - opened May 2021 - never late - 30% interest rate
4. CC 1 - $90 out of a $1500 limit - opened Apr 2018 - never late - 15.4% APR (2 missed payments in 2021, but never late since)
5. CC 2 - $6500 out of $10,000 limit - opened in Aug 2020 - never late - 20.65% APR
6. CC3 - $256 out of $2100 limit - opened in Dec 2021 - never late - 0% APR (12 month intro offer)
 
I am only showing 3 hard pulls with one dropping off in July and have no other late payments or collections. Any assistance provided would be greatly appreciated as I am looking to buy a house in the next 6 months and want to be fully prepared.
 
Thank you!
Message 1 of 11
10 REPLIES 10
SouthJamaica
Mega Contributor

Re: Help - What should I pay Down First To Improve Utilization


@FocusedOnFICO wrote:

Good morning  - I am new to this forum and need some guidance on how to "fix" some very poor judgment calls based on poor advice.  I took out several loans to try and improve my very stagnant credit score and my score continues to be stagnant.  I have the means to pay down 10k of the debt listed below but want to understand where to start first.

Current Experian FICO score: 695

List of obligations:

1. Loan 1 - $5473 left out of $8000 - opened Nov 2019 - never late - 22% interest rate
2. Loan 2 - $5652 left out of $7500 - opened Apr 2021 - never late - 30% interest rate
3. Loan 3  - $5592 left out of $6000 - opened May 2021 - never late - 30% interest rate
4. CC 1 - $90 out of a $1500 limit - opened Apr 2018 - never late - 15.4% APR (2 missed payments in 2021, but never late since)
5. CC 2 - $6500 out of $10,000 limit - opened in Aug 2020 - never late - 20.65% APR
6. CC3 - $256 out of $2100 limit - opened in Dec 2021 - never late - 0% APR (12 month intro offer)
 
I am only showing 3 hard pulls with one dropping off in July and have no other late payments or collections. Any assistance provided would be greatly appreciated as I am looking to buy a house in the next 6 months and want to be fully prepared.
 
Thank you!

1. You should apply for nothing during the 12 months prior to a mortgage application.  No applications for anything.

 

2.  Pay off CC1, CC2, and CC3.  After payoff, let one bank card report a small balance each month and then pay it off immediately.

 

3.  Apply the remaining $3100 to loan 2.  Then throw everything you have into getting rid of loan 2.

 

4. Once loan 2 is paid off do the same for loan 3.

 

 

 


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 2 of 11
FocusedOnFICO
New Member

Re: Help - What should I pay Down First To Improve Utilization

Thank you, I appreciate your detailed response.

 

Cassandra

Message 3 of 11
flexin222
Regular Contributor

Re: Help - What should I pay Down First To Improve Utilization

I wholeheartedly agree with SJ! Whoa...that 30% is killing ya that's why SJ said that, but since you only got 10k to throw at em, I'd take one out completely and put the rest on the other 30%. whittle it down and whatever you do don't take out any other loans. There's a time to spend and a time to pay em back! I too have high debt right now so if I don't have the money for it, I ain't getting it. Besides, I can use that extra cash to double up on bills. Good luck to ya!









Message 4 of 11
Boragard
Established Contributor

Re: Help - What should I pay Down First To Improve Utilization


@FocusedOnFICO wrote:

Good morning  - I am new to this forum and need some guidance on how to "fix" some very poor judgment calls based on poor advice.  I took out several loans to try and improve my very stagnant credit score and my score continues to be stagnant.  I have the means to pay down 10k of the debt listed below but want to understand where to start first.

Current Experian FICO score: 695

List of obligations:

1. Loan 1 - $5473 left out of $8000 - opened Nov 2019 - never late - 22% interest rate
2. Loan 2 - $5652 left out of $7500 - opened Apr 2021 - never late - 30% interest rate
3. Loan 3  - $5592 left out of $6000 - opened May 2021 - never late - 30% interest rate
4. CC 1 - $90 out of a $1500 limit - opened Apr 2018 - never late - 15.4% APR (2 missed payments in 2021, but never late since)
5. CC 2 - $6500 out of $10,000 limit - opened in Aug 2020 - never late - 20.65% APR
6. CC3 - $256 out of $2100 limit - opened in Dec 2021 - never late - 0% APR (12 month intro offer)
 
I am only showing 3 hard pulls with one dropping off in July and have no other late payments or collections. Any assistance provided would be greatly appreciated as I am looking to buy a house in the next 6 months and want to be fully prepared.
 
Thank you!

If I were in your shoes I would pay off loan #2 completely and put the remainder on loan #3.  When you pay off loan #2 you will have the extra monthly payment to knock out the remaining balance of loan #3 which would be $1244.  Loan #3 utilization would then go from 93% to 21% utilization.  With A paid off loan (#2) and loan #3 less than 30% utilization will definitely increase your score on your next reporting date

Message 5 of 11
righthererightnow
Frequent Contributor

Re: Help - What should I pay Down First To Improve Utilization

Credit cards, high interest first, then low interest.
Then once those are taken care of... the loans. : )





Message 6 of 11
SouthJamaica
Mega Contributor

Re: Help - What should I pay Down First To Improve Utilization


@Boragard wrote:

@FocusedOnFICO wrote:

Good morning  - I am new to this forum and need some guidance on how to "fix" some very poor judgment calls based on poor advice.  I took out several loans to try and improve my very stagnant credit score and my score continues to be stagnant.  I have the means to pay down 10k of the debt listed below but want to understand where to start first.

Current Experian FICO score: 695

List of obligations:

1. Loan 1 - $5473 left out of $8000 - opened Nov 2019 - never late - 22% interest rate
2. Loan 2 - $5652 left out of $7500 - opened Apr 2021 - never late - 30% interest rate
3. Loan 3  - $5592 left out of $6000 - opened May 2021 - never late - 30% interest rate
4. CC 1 - $90 out of a $1500 limit - opened Apr 2018 - never late - 15.4% APR (2 missed payments in 2021, but never late since)
5. CC 2 - $6500 out of $10,000 limit - opened in Aug 2020 - never late - 20.65% APR
6. CC3 - $256 out of $2100 limit - opened in Dec 2021 - never late - 0% APR (12 month intro offer)
 
I am only showing 3 hard pulls with one dropping off in July and have no other late payments or collections. Any assistance provided would be greatly appreciated as I am looking to buy a house in the next 6 months and want to be fully prepared.
 
Thank you!

If I were in your shoes I would pay off loan #2 completely and put the remainder on loan #3.  When you pay off loan #2 you will have the extra monthly payment to knock out the remaining balance of loan #3 which would be $1244.  Loan #3 utilization would then go from 93% to 21% utilization.  With A paid off loan (#2) and loan #3 less than 30% utilization will definitely increase your score on your next reporting date


I disagree. I am certain that OP will add many more points to the mortgage scores by concentrating on the revolvers first.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 7 of 11
OmarGB9
Community Leader
Super Contributor

Re: Help - What should I pay Down First To Improve Utilization


@SouthJamaica wrote:

@Boragard wrote:

@FocusedOnFICO wrote:

Good morning  - I am new to this forum and need some guidance on how to "fix" some very poor judgment calls based on poor advice.  I took out several loans to try and improve my very stagnant credit score and my score continues to be stagnant.  I have the means to pay down 10k of the debt listed below but want to understand where to start first.

Current Experian FICO score: 695

List of obligations:

1. Loan 1 - $5473 left out of $8000 - opened Nov 2019 - never late - 22% interest rate
2. Loan 2 - $5652 left out of $7500 - opened Apr 2021 - never late - 30% interest rate
3. Loan 3  - $5592 left out of $6000 - opened May 2021 - never late - 30% interest rate
4. CC 1 - $90 out of a $1500 limit - opened Apr 2018 - never late - 15.4% APR (2 missed payments in 2021, but never late since)
5. CC 2 - $6500 out of $10,000 limit - opened in Aug 2020 - never late - 20.65% APR
6. CC3 - $256 out of $2100 limit - opened in Dec 2021 - never late - 0% APR (12 month intro offer)
 
I am only showing 3 hard pulls with one dropping off in July and have no other late payments or collections. Any assistance provided would be greatly appreciated as I am looking to buy a house in the next 6 months and want to be fully prepared.
 
Thank you!

If I were in your shoes I would pay off loan #2 completely and put the remainder on loan #3.  When you pay off loan #2 you will have the extra monthly payment to knock out the remaining balance of loan #3 which would be $1244.  Loan #3 utilization would then go from 93% to 21% utilization.  With A paid off loan (#2) and loan #3 less than 30% utilization will definitely increase your score on your next reporting date


I disagree. I am certain that OP will add many more points to the mortgage scores by concentrating on the revolvers first.


Agreed, revolving credit history is weighed more heavily by the algorithm, especially for mortgage scores. However, the approach given by @Boragard is more financially sound.


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Message 8 of 11
calisig
Regular Contributor

Re: Help - What should I pay Down First To Improve Utilization


@SouthJamaica wrote:


List of obligations:

1. Loan 1 - $5473 left out of $8000 - opened Nov 2019 - never late - 22% interest rate
2. Loan 2 - $5652 left out of $7500 - opened Apr 2021 - never late - 30% interest rate
3. Loan 3  - $5592 left out of $6000 - opened May 2021 - never late - 30% interest rate
4. CC 1 - $90 out of a $1500 limit - opened Apr 2018 - never late - 15.4% APR (2 missed payments in 2021, but never late since)
5. CC 2 - $6500 out of $10,000 limit - opened in Aug 2020 - never late - 20.65% APR
6. CC3 - $256 out of $2100 limit - opened in Dec 2021 - never late - 0% APR (12 month intro offer)
 
I am looking to buy a house in the next 6 months and want to be fully prepared.

1. You should apply for nothing during the 12 months prior to a mortgage application.  No applications for anything.

 

2.  Pay off CC1, CC2, and CC3.  After payoff, let one bank card report a small balance each month and then pay it off immediately.

 

3.  Apply the remaining $3100 to loan 2.  Then throw everything you have into getting rid of loan 2.

 

4. Once loan 2 is paid off do the same for loan 3.


@SouthJamaica  - Just curious - I agree with your plan as being the fastest way to improve credit score to prepare for a mortgage, except for understanding why you suggest paying 'Loan 2' before 'Loan 3'. Why not pay 'Loan 3' before 'Loan 2'? Thanks

13Oct22 Exp F8: 812
Message 9 of 11
SouthJamaica
Mega Contributor

Re: Help - What should I pay Down First To Improve Utilization


@calisig wrote:

@SouthJamaica wrote:


List of obligations:

1. Loan 1 - $5473 left out of $8000 - opened Nov 2019 - never late - 22% interest rate
2. Loan 2 - $5652 left out of $7500 - opened Apr 2021 - never late - 30% interest rate
3. Loan 3  - $5592 left out of $6000 - opened May 2021 - never late - 30% interest rate
4. CC 1 - $90 out of a $1500 limit - opened Apr 2018 - never late - 15.4% APR (2 missed payments in 2021, but never late since)
5. CC 2 - $6500 out of $10,000 limit - opened in Aug 2020 - never late - 20.65% APR
6. CC3 - $256 out of $2100 limit - opened in Dec 2021 - never late - 0% APR (12 month intro offer)
 
I am looking to buy a house in the next 6 months and want to be fully prepared.

1. You should apply for nothing during the 12 months prior to a mortgage application.  No applications for anything.

 

2.  Pay off CC1, CC2, and CC3.  After payoff, let one bank card report a small balance each month and then pay it off immediately.

 

3.  Apply the remaining $3100 to loan 2.  Then throw everything you have into getting rid of loan 2.

 

4. Once loan 2 is paid off do the same for loan 3.


@SouthJamaica  - Just curious - I agree with your plan as being the fastest way to improve credit score to prepare for a mortgage, except for understanding why you suggest paying 'Loan 2' before 'Loan 3'. Why not pay 'Loan 3' before 'Loan 2'? Thanks


Just because it's older. But not of any great import.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 10 of 11
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