WWYD? Which is better?

[tleventer]

Situation:  700 credit scores.  Trying to sell my house and be able to buy another (DTI requires selling before purchase).  In addition to the mortgage and a HEL that will be paid off when the house sells, I also have $3100 on a CC ($9000 limit at 11.9% with a fantastic company) and a truck loan ($9000 at 6.69%).  Come July I will have $3000 to put down towards debts.

Question:  Is there ANY reason to pay down the truck first?  Or transfer the truck balance to the CC?  What if the CC was a lower interest rate (say 5.9%)?

I don't think so, but the truck payment is $267 and the min payment on the CC is only $70.  There is a small chance that if we're able to buy the place we want it will be via a loan assumption and the payments might be slightly higher than what the current loan officer has deemed as my max (per DTI -- $1650 vs. $1800) and that made me think that I should pay down the truck first.  If I apply the $3000 to it and xfer the rest, I don't think the CC minimum payment alone will go up to what the current combined minimum CC payment and truck loan payment is... thus improving my DTI.  BUT it WILL drastically increase the utilization on the CC... so I'm not sure which is better.

Thoughts?

FWIW, according to the current budget/spending plan pays off 1 of them this summer... the other would be paid off next summer.... so it's not like I'm adding or subtracting time to pay off on either of them (and that doesn't matter if it's 11.9% or 5.9% -- the only thing I save is some interest, not payment months).

Thanks.

[Anonymous]

Personally, since the truck is an installment loan and weighs very little in FICO scoring, I would pay down the CC.

[Lel]

Like guiness said, paying down the CC will have a greater effect on your scores.  You'll also pay less in interest payments by doing so.

The only reason to pay down your truck would be to improve your DTI for loan approval.  Your score won't go up by very much (indeed, it may not change at all), but if you're going FHA then your score is already fine and you don't need the decreased utilization to bring your score up any more.

Is your husband going to be on mortgage as well?  His scores are suboptimal.  If he is also on the CC, then paying it down will help his scores.

I'm not sure if I would transfer the truck payment to the CC.  It will increase the cost of the truck over time, especially if you only make the minimum payment that results.

[tleventer]

Thanks to both of you.

No, hubby isn't going to be on the mortgage, nor is he on any of these bills.  He has is own and we're working on those as well.  The plan we have (with "snowballing" payments) will pay off 2 of his high APR cards and my CC this summer along with his car and student loans (the latter 2 will be paid off normally this summer but their payments rolled into our debt payoff plan which is how I can pay off my truck next year instead of 3 years down the line).