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Seeking advice on how to improve credit when utilization is high

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K-in-Boston
Credit Mentor

Re: Seeking advice on how to improve credit when utilization is high


@tcbofade wrote:

It's not a bad idea.... essentially, you're paying money for a better Fico score... which will save you money...

 

I would check with PenFed's personal loan prequalify tool before pulling the trigger.

 

Good luck!


I agree.  It also commits you to a payment schedule and in the long run you should end up saving much more with additional opportunities likely to open for lower interest borrowing as long as you continue on your payment strategy.

Message 51 of 163
SouthJamaica
Mega Contributor

Re: Seeking advice on how to improve credit when utilization is high


@Expansion wrote:

So today on a whim I googled "Upstart personal loan competitors" (or something like that) and clicked on an ad link to Discover personal loans.

 

I did a soft pull pre-qual thing and got offered $15,000, at 13.99% APR, for 36 months. 

(better than the 15.24% on my current loan with Upstart

and the 19.94% Lending Club has been offering). 

 

Monthly payments of $513/month.  Which isn't that much more than the extra $400/month I was planning to use to pay down balances.

 

There were options for longer terms, but all at higher rates.

 

Then the next screen asked me to call right away.  (I checked, this is normal.)  It was just after the office closed, so I need to wait until tomorrow. 

 

70% of the loan gets paid directly to the credit cards I'm paying down.  30% can be paid into my account.

 

I looked at my numbers really carefully. 

 

I could actually use this to get all but one of my balances down to 68% utilization. 

 

And then that last card would just need $386 more to get all the way down to 68% (easy). 

 

For 3 cards it would be a small interest rate reduction.  (.25 - 2%)

For 3 cars it would be a small interest rate increase (around 1%)

For 3 cards it would be between 3-5.99% increase.

 

Combining to about $273 more interest per year. 

 

Normally I would not in a million years think about moving balances to a higher rate and paying more interest. 

 

But if $273 more a year gets this moving, I'm comfortable with that.  And if this means I will soon be getting 0% BT offers, then it seems like it would more than pay for itself.

 

I checked the online reviews.  I checked a bunch of posts on these forums too.

 

Doing my due diligence, I did soft-pull prequals with Apple FCU and NASA FCU (where I am already a member) and both said no offers at this time. 

 

Is there any reason for me not to do this Discover personal loan? 

 

 

@tcbofade , @SouthJamaica , @FinStar , @K-in-Boston 

 


It seems all right to me. But don't count on getting 0% balance transfer offers pouring in. I don't know where you got that idea from Smiley Happy


Total revolving limits 650200 (530700 reporting) FICO 8: EQ 708 TU 714 EX 715

Message 52 of 163
Expansion
Regular Contributor

Re: Seeking advice on how to improve credit when utilization is high

@K-in-Boston  and @Anonymalous , thank you.  It means a lot to be able to run this by you and know I'm not missing anything. 

 

@tcbofade thank you!!  at your suggestion I just used the penfed prequalifier tool and was offered either $15k at 36 or 60 months, or $20k at 60 months, all at 14.99%.  

 

It feels AMAZING to be offered something halfway-decent from a reputable borrower.

 

My sense is to go ahead and pursue the Discover loan first, since it's 13.99% instead of 14.99%.

 

And I've got PenFed as a backup if needed.  

 

Question: As my mind is turning all of this over, if this first personal loan goes through, I'm wondering about getting a second one to just move balances out of my CLI and get my CU down to 48%.  

 

Is there a rule of thumb about how much time to wait in between applying for personal loans?

Message 53 of 163
K-in-Boston
Credit Mentor

Re: Seeking advice on how to improve credit when utilization is high

Every percent definitely helps.  Does the 36 month term from Discover allow the payment to be low enough for you to continue to tackle balances that will still be remaining?  Also keep in mind that your DTI ratio may be affected with loans vs minimum revolving payments.  As for how long to wait, that is really profile dependent.  If taking both loans could save you money and get your balances paid off faster, it may be worth considering both.

 

@SouthJamaica OP listed quite a number of cards in their first post that should either already have BT offers (but OP would not have available credit to use them) or cards that have a very good chance of offering future BTs like Navy, BOA, Discover, and possibly Citi, Chase, and Wells Fargo.  Ideally if OP can open those up and shift the balances from high interest cards to very low or 0% APR BT offers, they should be able to make a significantly larger dent in the balances provided they continue the same payment amounts.

Message 54 of 163
SouthJamaica
Mega Contributor

Re: Seeking advice on how to improve credit when utilization is high


@K-in-Boston wrote:

Every percent definitely helps.  Does the 36 month term from Discover allow the payment to be low enough for you to continue to tackle balances that will still be remaining?  Also keep in mind that your DTI ratio may be affected with loans vs minimum revolving payments.  As for how long to wait, that is really profile dependent.  If taking both loans could save you money and get your balances paid off faster, it may be worth considering both.

 

@SouthJamaica OP listed quite a number of cards in their first post that should either already have BT offers (but OP would not have available credit to use them) or cards that have a very good chance of offering future BTs like Navy, BOA, Discover, and possibly Citi, Chase, and Wells Fargo.  Ideally if OP can open those up and shift the balances from high interest cards to very low or 0% APR BT offers, they should be able to make a significantly larger dent in the balances provided they continue the same payment amounts.


Maybe so, and I hope that happens, but if they're not being offered now, I wouldn't assume that taking out a loan and paying down some high utilization cards is all of a sudden going to bring them rolling in.


Total revolving limits 650200 (530700 reporting) FICO 8: EQ 708 TU 714 EX 715

Message 55 of 163
tcbofade
Super Contributor

Re: Seeking advice on how to improve credit when utilization is high

A.)  Ur wekkum!  Smiley Happy

 

B.) @SouthJamaica is very correct.   Opening a personal loan (or two) to play utilization games SHOULD result in higher FICO scores which SHOULD result in more zero percent balance transfer opportunities.

 

...but nothing is guaranteed.

 

Please don't put yourself in jeopordy financially hoping for results that don't arrive.

 

You can do this.  Go slowly, pay attention, and measure risk.

 

Good luck!

 

 

07/01/24 Fico 8: EX 766, EQ 811, TU 787.
Fico 9: EX 772 07/14/24, EQ 789 07/04/24, TU No idea.

Zero percent financing is where the devil lives...
Message 56 of 163
Expansion
Regular Contributor

Re: Seeking advice on how to improve credit when utilization is high

Thank you for looking out for me, @tcbofade and @SouthJamaica !

 

Before I make any of these moves, I run my numbers really carefully, and also make sure whatever I'm committing to isn't going to overextend me.   

 

And I understand that nothing is guaranteed Smiley Happy

 

Looking at personal loans is just a way to reduce utilization, gradually raise my scores, gradually lower my rates, and then be in a position to be able to move balances, gradually, to lower rates and pay off faster.

 

If 0% BT offers show up, great.  If not, that's OK.  

 

UPDATE: Discover declined Smiley Sad  I'm almost positive the letter will say "high utilization" for CCs and loans (because the Upstart loan was just opened and only has 3 payments down).   When I asked, what about a lower loan amount, the CSR told me I could try again in 15 days.   

 

I know with Upstart and Lending Club those were both smaller amounts, $8,000, so maybe it was just too big.  But who knows.  

 

I went ahead and submitted with PenFed.  

 

I will keep you posted...

Message 57 of 163
Expansion
Regular Contributor

Re: Seeking advice on how to improve credit when utilization is high

PS.  The silver lining is that the entire Discover process was under a soft pull.  No HP.  

Message 58 of 163
tcbofade
Super Contributor

Re: Seeking advice on how to improve credit when utilization is high

Sorry for the denial, and good luck with PenFed!

 

...and if that doesn't work out, just keep paying down the balances until it does!

07/01/24 Fico 8: EX 766, EQ 811, TU 787.
Fico 9: EX 772 07/14/24, EQ 789 07/04/24, TU No idea.

Zero percent financing is where the devil lives...
Message 59 of 163
tcbofade
Super Contributor

Re: Seeking advice on how to improve credit when utilization is high

...and?   What did they tell you?

07/01/24 Fico 8: EX 766, EQ 811, TU 787.
Fico 9: EX 772 07/14/24, EQ 789 07/04/24, TU No idea.

Zero percent financing is where the devil lives...
Message 60 of 163
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