@Anonymous wrote:Good evening everyone,
We're preparing to refinance from an FHA loan to a Conventional loan in July 2022. We have a personal loan with a balance of $13,000 @ $601/per month at 25% interest. We'd like to refinance this loan to a lower interest rate. We were approved for a $32,500 loan at Lending Club at 12.29% with a payment of $684. I'd like to pay off the loan and our credit cards but don't know what will help our scores more, to pay off as many "balances" as I can with the remaining money or pay each card below the aggregate thresholds (I can get all to 28.9%) with the remaining funds? Below are the card balances and limits for myself and my husband:
Navy Flagship $9104/$10,000
Navy Cash $2,200/$3,000
B of A $5,800/$6,500
Chase $2,900/$3,500
Capital one $900/$2,000
Capital one $300/$1,250
Kitsap CU $4,005/$5,000
Navy Go $400/$500
Firestone $936/$1,200
Care Credit $421/$1,000
Qualstar CU $1,500/$1,500AMEX. $0/$1,000
Macy AMEX $0/$1,000
Citi $0/$3,400
We make decent money but have used credits cards to purchase unnecessary items, the plan is to place the cards in water and freeze them once I get them paid off. We also plan to pay $1100 a month on the Lending Club loan and once more bills are paid, we plan to roll those funds over to the Lending Club loan, the plan is to have the loan paid off in 36 months.
Also, if it helps Credit Karma shows
my score 662 and 668
husband's 656 and 658
Thank you to all for any advise you can provide
@Anonymous Welcome to the myFICO forum. To better answer your question(s), the community will need to know a little more information.
Please clarify which are your revolving accounts.
Please clarify which are husband's revolving accounts
Please clarify available funds to pay down your the debt.
Please clarify available funds to pay down husband's debt.
For mortgage, you will need your and/or husbands's Experian FICO 2, TransUnion 4, Equifax 5 scores for your refinance.
Free mortgage scores
EX2 + 3 Bureau FICO 8 scores and reports for free or $1 at Experian or CreditCheckTotal (part of Experian). Cancel in 7 days or less to avoid the reoccurring charge.
TU4 WyHy quarterly score. Not sure on membership requirement. Maybe hard pull TU?
EQ5 Get a savings account with DCU. Soft pull EQ to be a member. Free monthly score.
You can also obtain your 3 bureau mortgage scores at FICO Advanced . Cancel plan after you obtain your scores and reports to avoid re-occurring monthly charge.
@Anonymous wrote:I'd like to pay off the loan and our credit cards but don't know what wil help our scores more, to pay off as many "balances" as I can with the remaining money or pay each card below the aggregate thresholds (I can get all to 28.9%) with the remaining funds?
Reducing revolving individual and aggregate utilization % has more of a score impact than the installment loan. Mortgages scores, e.g. EX2, TU4, EQ5 likes AZEO All Zero Except One card reporting a balance. The closer you can get to ~20% of accounts with balance the better.
Remember these aggregate utilization thresholds: 9%, 29%, 49%, 69%, 89%
Remember these individual utilization thresholds: 29%, 49%, 69%, 89%
I would recommend reading the below from ABCD2199
The Truth about Credit Card Utilization
My 11 Rules to Credit Rebuilding
FICO Score: What to pay down first?
From Birdman7
General Scoring Primer and Version 8 Master Thread, pub.5.17.20
@Anonymous wrote:Thank you for your response. I've marked who it belongs to next to the cards below. But keep in mind, I'm an authorized user on all of his and he isn't on any of mine. We removed him 2 months ago to boost his score. Also, after paying mortgage $3009/mo, (we also have 2 car payments $362 and $392 per month). After food and appx $1000 a month for gas and entertainment, we'd have an extra $1400 per month to pay down cards. I hope this answers your questions.
Thank you
Navy Flagship $9104/$10,000-mine
Navy Cash $2,200/$3,000-mine
B of A $5,800/$6,500-husbands
Chase $2,900/$3,500-mine
Capital one $900/$2,000-mine
Capital one $300/$1,250-husbands
Kitsap CU $4,005/$5,000-husbands
Navy Go $400/$500-husbands
Firestone $936/$1,200-mine
Care Credit $421/$1,000 -husbands
Qualstar CU $1,500/$1,500-husbandsAMEX. $0/$1,000-mine
Macy AMEX $0/$1,000-mine
Citi $0/$3,400-mine.
Since you are an AU on his cards, then you may receive the score penalty for accounts with balance, if he is reporting a balance, and if you are crossing a threshold of accounts with balance, e.g. ~20-25%, 50%, etc.
See Update: FICO2 experiment (is it worth it?)
For true AZEO or close to it for Experian, AU card must report zero. Primary card report a small balance. I would presume the same for TU4 and EQ5.
@Anonymous wrote:Navy Flagship $9104/$10,000-mine
Navy Cash $2,200/$3,000-mine
Chase $2,900/$3,500-mine
Capital one $900/$2,000-mine
Firestone $936/$1,200-mine
AMEX. $0/$1,000-mine
Macy AMEX $0/$1,000-mine
Citi $0/$3,400-mine.
B of A $5,800/$6,500-husbands
Capital one $300/$1,250-husbands
Kitsap CU $4,005/$5,000-husbands
Navy Go $400/$500-husbands
Care Credit $421/$1,000 -husbands
Qualstar CU $1,500/$1,500-husbands
@Anonymous I separated your and husband's card info to make it a little bit more visually easy on the eyes.
I would suggest picking the low hanging fruit. Meaning, pay to zero the low dollar amounts. In addition, address the individual max out cards at or near 100%! Those maxed out cards are a major score penalty.
Still unclear on your budget but at least get the cards out of the red zone.
Since your refinance goal is July 2022, I would presume paying less interest fees on the revolving accounts and increase mortgage credit scores is your priority?
You can do avalanche or snowball paydown method.
@Anonymous wrote:sorry, my explaination was a bit confusing. Thank you so much for your advice
No problem. Again, what's your budget, $32,500?