Paying off Credit Card Debt

[Anonymous]

Hello, My credit score took a nose dive. It went from 715 to 584 in 4 months. Perhaps it's becuase I'm maxed out on 4 credit cards with about $9000 in debt. All of my accounts are good standing, though. I pay about $10 above the minium of each. The APR on all of them is between 15-23%. I had made larger payments on my cards in the past, but due to financial hardships I can only make minimum payments now. I pay $275 a month in credit card payments. I'm interested in either a personal bank loan or transferring my balances to a 0% balance transfer credit card. My mother has agreed to co-sign with me on a loan or credit card as she has stellar credit & could get me a lower interest rate & higher credit line. If I continue the way I'm going I will be 90 by the time I pay off my cc debt. Is it wise to transfer the debt onto one card or would it be better to take out a loan with a lower interest rate (preferably a fixed interest rate)? Any advice would be greatly appreciated. Best, Noah

[Anonymous]

Moving debt off revolving to installment should help on several fronts. It will get your CC util down, and that is probably what's killing your scores. Installment debt is better debt than revolving debt, but a mix is better still.

What are your CC balances, limits and APRs?

[Anonymous]

AMEX 18.24 Balance: 3613.24 Limit: 3700 BofA 15.24 Balance: 3355.31 Limit: 3500 HSBC 16.15 Balance: 617.63 Limit: 700 Wells Fargo 17.62 Balance:2295.21 Limit: 2300 Total is 9881.39, so it's over 9000 Noah

[Anonymous]

Overall util is 97 percent with your individual cards ranging from 88 to 100 percent util. Ain't no blood in that turnip for BT magic, and the odds of getting a 0% CC to do BTs are probably close to not happenin'.

Get the co-signed loan and if possible pay all the CCs down to between 1 and 9 percent util. I like to aim for 5 percent util that way when finance charges tack on at statement closing it'll bump you up to like 6 percent when it gets reported to the CRAs.

Don't close the CCs, but don't run 'em back up either.

Here's some good reading material. Start with Credit Scoring 101.

http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&message.id=6834

[Anonymous]

So with a loan, I shouldn't pay the credit cards off completely? I should just get them down to 1-5%, why not pay them off completely?

[Anonymous]

Pay them off , and then use them just a little to show low level of credit use.  FICO likes that. 

[Anonymous]

---

Gensho wrote:
So with a loan, I shouldn't pay the credit cards off completely? I should just get them down to 1-5%, why not pay them off completely?

---

With utilization of between 1 and 9 percent, you get the best FICO score possible from your utilization. Keeping 5 percent (of the total CL) on the CC gets you there yet avoids a finance charge putting you up over 9 percent. That's why I say keep 5 percent. Gets you the best possible FICO score the fastest without having to use the CC.

[Anonymous]

Okay. Do you mean carrying over a balance each month of 5% or spending 5% each month & then paying it off every month? Noah

[smallfry]

---

@Anonymous wrote:
Okay. Do you mean carrying over a balance each month of 5% or spending 5% each month & then paying it off every month? Noah

---

You want your CC to report between 1-5% on the cycle date. That's what will show on your CR. You can actually pay off the full amount a few days later befroe the due date and avoid all finance charges. The date your statement cuts is the cycle date.

[Anonymous]

---

Gensho wrote:
AMEX 18.24 Balance: 3613.24 Limit: 3700 BofA 15.24 Balance: 3355.31 Limit: 3500 HSBC 16.15 Balance: 617.63 Limit: 700 Wells Fargo 17.62 Balance:2295.21 Limit: 2300 Total is 9881.39, so it's over 9000 Noah

---

Getting the installment loan to pay the CCs is a great way to fix your FICO. If I were you, I wouldn't leave a penny on the CCs. Pay the installment loan on time and get rid of your credit cards. Don't close them, shred them.

Are you going to be able to make your payments???? You seem very over extended based on your balances.

Rob