The points you lost when you paid off your second auto loan sound like they were from the installment balance-to-loan ratio metric. If $5,000 is enough to pay your installments down to the same aggregate b:l that you had before you paid off the second car loan or better, then you should see the points you lost there return. However, unless your auto loan and/or your personal loan are with a lender that does not advance the maturity date on prepayment (most do), then any gains here would also be lost more quickly because the loan would be closing that much sooner. Additionally, revolving util is weighed much more heavily than installment b:l on versions 8 and 9, so $5k applied to one of your cc's might be more bang for your buck on those versions in the long run.
From what you've posted here, your current revolving util would be:
Aggregate: 51.1%
Highest individual (Key Bank): 94.7%
If you apply the full $5k to Key, the revolver you're most considering, it would be:
Aggregate: 44.4%
Highest individual (BoA): 93%
So agg util would come down some, which might help, but highest individual wouldn't really move b/c the individual util on Key and BoA are so close. You could consider instead applying $2.5k to each, which would take their individual util's both below that of your next highest, which is the CU card @ 79.9%. That way you would be posting some improvement to both metrics.
That's ofc considering scoring alone. If you find snowball method the most effective and motivating, then I would continue with that and just pay off most of the Citi card. Alternatively, the BoA card has the highest rate of all your listed lines, so applying your $5k there would save you the most on interest.
@Winchester2005 wrote:Excellent thank you for your advice. To be clear, I only have 2k not 5k that suddenly will be coming my way (I may have had a typo in my original post)
Ah. That changes the math on your util for the different ways you could apply the money, but you could run those yourself and see how they come out.
So, from what I gather and what I know of personal loans, prepaying doesn't move the maturity date at all (in this personal loans case the mat date is 5/2024). So if I were to use the 2k to pay down that personal loan you're saying it'll get paid off sooner than that anticipated 5/2024 mat date since the payment amt will stay the same, but once it's paid off it may hurt score again like the 2nd auto?
Who is your personal loan with? If they advance maturity date on prepayment like most lenders, then applying the $2k to the personal loan would cause it to be paid off sooner. If they do not advance maturity date on prepayment, then applying the $2k to the PL would not cause it to be paid off sooner. You should be able to call up your lender and find out which is their policy. When your PL is paid off, it could cause a score decrease if the change to aggregate balance-to-loan from subtracting its balance from the numerator and its original loan amount from the denominator causes that metric to move back up across scoring thresholds.
So it does sound like if the revolving util weighs more heavily (and I do get more motivation with snowball/paying down smaller bals first) paying down on that Simplicity card may be best with the 2k.
If snowball method has worked the best to help you tackle your debt, then, yeah, it might be best to stay that course so you stay on track for paydown. Taking a temporary detour to get your 90%+ util cards down below 89.4% and then going back to the snowball method to help mitigate the risk of AA also sounds like a good idea to me, too.
As a side note, should I stop extra payments I have going to my personal loan? The payment amt is 170.57, and I usually pay that amt every other week rather than just once a month. It sounds like that won't help my score too much?( I just started doing this literally last paycheck, so good to know if it doesn't help it too much I can start applying that to the Simplicity card)
Agree with @Anonymous that, for now, that money is probably best applied to your revolving balances as part of the snowball. That way you're concentrating all of your extra debt paydown on reducing a particular minimum monthly payment, you're tackling your higher-interest debt category first, and attending to your balances in a way that's more in line with what lenders might expect or want (since installment loans are designed to be paid in the agreed amount over their term, but, in the eyes of lenders, responsible revolving involves paying down the balances more quickly than just the minimum payment).
@Winchester2005 Guess my first question would be how much are you paying monthly towards each of them? I would take 983 and put it toward CU card and 1000 and put toward BOA. Also try asking for a CLI on the cards that offer SP to increase your scores more.
In addition to the CLI requests, do you have any balance transfer options? Current interest alone is $604 monthly.
| bank | apr % | limit | bal | util | int/month $ |
| BOA | 22.99 | 15000 | 14000 | 93 | 268 |
| CU CC | 9.75 | 15000 | 11983 | 80 | 97 |
| Discover | 12500 | 0 | 0 | 0 | |
| Key | 16.99 | 7500 | 7100 | 95 | 101 |
| Citi | 17.99 | 7700 | 5600 | 73 | 84 |
| Loan 2 | 12.75 | 7500 | 5047 | 67 | 54 |
| TOTAL | 604 |
For example, BOA Citi and Discover all have 12mo/0% offers available to me at this time. If you did as well, you could put the 2000 towards BOA and transfer 12000 to Discover at 0%. Then transfer Key 7100 + Citi 5600 to BOA at 0%.
| bank | apr % | limit | bal | util | int/month $ |
| BOA | 0 | 15000 | 13081 | 87 | 0 |
| CU CC | 9.75 | 15000 | 11983 | 80 | 97 |
| Discover | 0 | 12500 | 12360 | 99 | 0 |
| Key | 16.99 | 7500 | 0 | 0 | 0 |
| Citi | 17.99 | 7700 | 0 | 0 | 0 |
| Loan 2 | 12.75 | 7500 | 5047 | 67 | 54 |
| TOTAL | 151 |
So what does that accomplish? Interest alone reduces to $151 monthly. Continue to pay the most to BOA because at the end of the period that 23% hits the remaining balance.
Yes there are ~3% balance transfer fees, $741 which are included in the new BOA and Discover balances, but remember $453 per month going towards principle instead of interest.
Yes one account is still maxed, but applying the ~$4500 in interest savings for the year to one of those accounts will help you pay it off completely.
Loans are looked at by FICO in a different light. FICO knows once you take out a loan your util will be high. Now do that to a revolving credit account and your nailed. Two different scenarios. So like some said. Forget the extra loan payment. Just pay the one loan. Put the extra payment towards your credit card debt. Paying down revolving debt does more good than paying down a loan score-wise. In fact give your cards to a family member who can hold them so no charges can be applied until they are paid off. Think of the interest your paying that you'll never see again. Main goal is get out of debt and never get the swipe fever again.
