What debt to pay first

[Anonymous]

Hi!

I am wanting to purchase a home before the end of 2019 (my current lease ends in January 2020). I have about $2,700 I can put towards debt this month. Where is the best place to put it considering credit score, credit utilization, DTI, etc.?

Gross annual salary is $89,000

Mortgage will be in my name only (separate from spouse and we are in a community property state)

My debt:

Capital One CC $75/$750 limit

Uplift $386

Exeter Finance (joint auto loan) $2,671

457 Loan $4,054

Family Loans $4,523

Capital One CC $4,874/$5,500 limit

Capital One (individual auto loan) $26,152

AES Sucess (student loan) $28,413

Let me know if you need any other information. Thank you!

[CreditInspired]

Hello OP and welcome to the forum

With your $2.7K, this is what I suggest:

Capital One CC $75/$750 limit YES

Uplift $386 YES

Exeter Finance (joint auto loan) $2,671 NO

457 Loan $4,054 NO

Family Loans $4,523 NO

Capital One CC $4,874/$5,500 limit YES, $2,239

Capital One (individual auto loan) $26,152 NO

AES Sucess (student loan) $28,413  NO

• No need to pay toward 457 because this loan you're paying yourself back and I don't even think this count as a debt when applying for a mortgage.
• I think hold off on paying toward family loan because this also is not a debt that would be counted. Hopefully, they'll understand.
• Paying off Cap1 and Uplift will put two accounts at $0 balances, which will give your scores a small bump.
• Paying $2,239 will put UT at 41%, down from 87% (that's 2 thresholds), which will also net a point or two.

Hope this helps

[Anonymous]

Thank you! I have another question ...

For credit score purposes ... is it better to have 1 credit card at $0 (I have a total of 2 credit cards) or is it better to have a small reoccurring amount (like Netflix) charged to the card every month? Also, if I keep a balance, what percentage should it be? I have read 1-9% ... is that the best for credit score purposes?

I have seen both methods recommended.

Thank you again for all of your assistance!

[CreditInspired]

Since you only have 2 CCs, yes, for scoring purposes, let one card stmt balance report $0 and the other report less than 8.9%.

[Anonymous]

Awesome ... thank you!