Credit scores shouldn't take priority over finances. Do what's best for your finances, and the score increases will follow. Unless there's a pressing need for credit anytime within the next few years (i.e. new car because your current one is about give out, mortgage), don't sweat the scores so much.
That said, definitely have a safety net and put money away into savings for a rainy day. And yes, IMO, tackle that personal loan first as it has the highest interest and is costing you the most money every month.
@Anonymous wrote:So I have read about snowball and avalanche but wanted some advice on how to pay down these debts the best and fastest.
Personal loan - $14,624 @ 9.75%
Medical loan - $6852 @ 6.99%
Chase Credit Card - $2980 @ 0% (intro rate)
Citi Card- $3400 @ 0% (intro rate)
Doctor bills - $1052 @ 0%
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TOTAL - $28,908
Now all the websites say to make minimum payments to everything except the Personal Loan and put $100 extra a month towards that. Smart since it's the highest interest. Says if I do the avalanche method I will be out of debt in 3 YEARS.
But my credit score keeps dropping every month. I am wondering if I should be putting that $100 extra towards one of those instead? Those report to the credit score faster right? Those would make it rise faster than the personal loan right?
I plan to keep finding BALANCE TRANSFER cards and moving the credit card debt to them. I have 22 cards (only these two have balances - so those cards often offer me ability to do a 0% transfer)
Also - I just stashed away $350 today into savings. I read I should have an emergency fund so if something comes up tomorrow I have cash instead of credit cards. But would it be better used at paying down $350 of debt?
Personal loan - $14,624 @ 9.75% Original Loan amount?
Medical loan - $6852 @ 6.99% Original Loan amount?
Chase Credit Card - $2980 @ 0% (intro rate) Credit Limit?
Citi Card- $3400 @ 0% (intro rate) Credit Limit?
Doctor bills - $1052 @ 0% Is this on Care Credit? If so. Credit Limit.
If you can fill out the red above. Then we can find out whats dropping your score each month.
@Anonymous wrote:Personal loan - $14,624 @ 9.75% Original Loan amount? $18000
Medical loan - $6852 @ 6.99% Original Loan amount? $7500
Chase Credit Card - $2980 @ 0% (intro rate) Credit Limit? $4500 64.2%
Citi Card- $3400 @ 0% (intro rate) Credit Limit? 4500 75.5%
Doctor bills - $1052 @ 0% Is this on Care Credit? just owed to doctor offices - not being reported to credit
On the 2 cards your util is high. To get points faster. (Which getting out of debt ranks first) Paying those down to <48% would help. But theres no interest. Dont know how long the terms are until interest kicks in. If its soon. There's more instant debt. Paying the loan as much as possible due to the highest interest will save you short term money. Best case scenario is PIF before the interest kicks in on the cards.
But on the other hand. To say even more in the long run. Pay down the credit cards before the 0% promo ends. No credit card sits at 9.75%. Maybe a credit union. Likely not. So theres 2 routes to go with this. Pay down the cards. Then attack the loan 9% loan. Or if time will allow for you to pay down the loan before the 0 promo ends. Pay down the loan then the cards.
Kinda stuck in between. The interest will remain with the loan. But when the 0% promo ends. Here comes higher card payments. Good Luck!
@Anonymous wrote:Well the plan is to keep moving those credit cards to new balance transfer cards so the 0% will continue over and over and over.
We have about 22 cards (only these two used) and they are constantly offering us balance transfers for 18 months at 0%.
So if that is the case you think the PERSONAL LOAN?
My goal isn't only to get down debt - it's also to increase credit score to refinance house!
Is a target goal for the home refinance to do a cash out and pay off debt, get a lower interest rate, or extend payments out further to reduce monthly expediture?
Are there any other debts, collections, charge off, or other derogatories (late pays in last 24 months) on your report(s)?
I think the snowball method is likely the best. You start paying off your bills smallest to largest. So you would start with the doctor bills and pay all of your extra income on those until they are done, then you would move on to the next largest debt after that. The other thing to think about here is that those doctor bills could be turned over to collections at any time. You are expected to pay them as soon as possible, rather than dragging it out like a credit card balance. Many people on these forums end up with credit issues from that, so if your credit is a priority, I would definitely get those paid first.
In addition, paying down the credit cards first will get much more of a score increase than paying off the installment loans. Utilization on revolving accounts affects your credit score a lot, whereas installment loans matter very little in terms of the balance. For example, I played around with the FICO score simulator recently. I have about $38k in student loan debt. If I paid all of that off right now, the simulator says I would gain 5 points on my credit score. So if you do want to refinance your house, then your best bet would be paying the cards off first (after the doctor bills).
In this method, you'd pay them down in this order:
1. Doctor bills - $1052 @ 0%
2. Chase Credit Card - $2980 @ 0% (intro rate)
3. Citi Card- $3400 @ 0% (intro rate)
4. Medical loan - $6852 @ 6.99%
5. Personal loan - $14,624 @ 9.75%
