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Paying down CC Debt

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Anonymous
Not applicable

Paying down CC Debt

Hello,
So my scores are sitting at 581, 581 and 601. I am just wanting to make sure my plan of attack looks correct. I really want to have a relationship with Chase and Capitol one. I have about 2000 a month to put towards paying things down.  Should i maybe move chase card up? I do not want to lose high limit on that card. 

 

My plan is to pay off in this order

Janurary: Discover pay off completely 
Feburary: Pay off one barclay

March: Pay off other barclay

April: 2000 to Amex

May: 2000 to Disney Chase

June: 2000 to Amex

July 2000 to Disney Chase

August: 400 to Disney Chase

 

 

Below are my cards and their limits/Balances

Card                  Balance        CL                   NOTES

CAP1                  0               $500

Chase-dsny     4400            5000

Amex EvD        4000            $4500

ChsFreedom       0                 $500

Barclay AR        2400              2800

Discover              1900               2000

CU LOC                   0                      500

Barclay                 1800                 2000

Indigo                        0                     300  (Want to cancel this, but helps with utilization for now)

Message 1 of 17
16 REPLIES 16
Anonymous
Not applicable

Re: Paying down CC Debt

Personally, I think you should pay at least minimum payments on all cards, then attack top 2 or 3 with the highest interest (interest rate multiple by the balance).

Message 2 of 17
Priory_Man
Valued Contributor

Re: Paying down CC Debt

A reasonable plan, I'm not sure you are in any real danger of losing any CL's unless you give the CC company a reason to start looking at your accounts. Your plan seems like an OK one, I hope it works out for you. Any extra you have I would add to the minimum payments of all cards.






"Total revolving credit $286,000 Current UTIL >1%"
Message 3 of 17
HeavenOhio
Senior Contributor

Re: Paying down CC Debt

Welcome, @Anonymous. Smiley Happy

 

Your first priority should be to hopefully avoid adverse action, i.e. credit limit decreases and balance chasing. Start by paying each card down to 67% of its limit. That can be accomplished in your second month of payments with money to spare. Once you've done that, bring each card down to 47% of its limit.

 

The thresholds you want to cross are actually 68.9% and 48.9%. Paying to 67% and 47% will prevent the next month's interest charge from bumping you back over the threshold.

 

After all cards are at 47%, you can pay down as you like, e.g. highest interest first, snowballing small balances first, or aiming for a (slightly) quicker score gain.

Message 4 of 17
Anonymous
Not applicable

Re: Paying down CC Debt


@HeavenOhio wrote:

Welcome, @Anonymous. Smiley Happy

 

Your first priority should be to hopefully avoid adverse action, i.e. credit limit decreases and balance chasing. Start by paying each card down to 67% of its limit. That can be accomplished in your second month of payments with money to spare. Once you've done that, bring each card down to 47% of its limit.

 

The thresholds you want to cross are actually 68.9% and 48.9%. Paying to 67% and 47% will prevent the next month's interest charge from bumping you back over the threshold.

 

After all cards are at 47%, you can pay down as you like, e.g. highest interest first, snowballing small balances first, or aiming for a (slightly) quicker score gain.


These thresholds are for FICO scoring, and while that might pay a large part in issuers initiating AA, it's possible that other factors are much more critical.   So I might still prioritize interest reduction over paying off to thresholds.

Message 5 of 17
Anonymous
Not applicable

Re: Paying down CC Debt

+1 to this. Some people are concerned about the amount of interest they are paying, but if you are looking primarily to bump up your FICO scores, then I would follow this plan. Make sure you make the minimum on all cards, but attack those that have the highest UTL first (Disco, Chase Disney, Amex, & Barclays). As stated by HeavenOhio, get them all below 68.9%, then 48.9% then below 28.9%, and finally all under 8.9%. 

 

I would pay $400 to each of the 5 accounts first, getting the UTL down. That should give you a score bump. Next month do the same, giving you another score bump. Third month pay one off & divide the remaining funds among the four other accounts. Wash, rinse & repeat for the next four accounts. You'll pay them all off in the same time frame as your previous plan, but you'll be getting the UTL down quicker, hopefully before they start BCing you. GL!

Message 6 of 17
Anonymous
Not applicable

Re: Paying down CC Debt

Ok, so I actually tossed these balances into my budget spreadsheet to see what a payoff plan would look like giving you FICO bumps along the way.This does NOT calculate any interest, but you will be within ballpark of these figures, and you will be showing consistent pay history rather than one big payment to each account.

 

Let’s say you are making one payment per account per month, starting on Jan 25, 2019 (or whatever day your pay period is)

 

01/25/19            Balance      Limit                Payment

Chase-dsny     4400            5000              400

Amex EvD       4000            4500              400

Barclay AR      2400            2800              400

Discover          1900            2000              400

Barclay            1800            2000              400

 

02/22/19            Balance      Limit                Payment

Chase-dsny     4000            5000              400

Amex EvD       3600            4500              400

Barclay AR      2000            2800              400

Discover          1500            2000              400

Barclay            1400            2000              400

 

03/22/19            Balance      Limit                Payment

Chase-dsny     3600            5000              400

Amex EvD       3200            4500              400

Barclay AR      1600            2800              400

Discover          1100            2000              400

Barclay            1000            2000              400

 

04/19/19            Balance      Limit                Payment

Chase-dsny     3200            5000              350

Amex EvD       2800            4500              350

Barclay AR      1200            2800              350

Discover           700            2000               350

Barclay             600            2000               600

 

05/17/19            Balance      Limit                Payment

Chase-dsny     2850            5000              550

Amex EvD       2450            4500              550

Barclay AR        850            2800              550

Discover           350            2000               350

Barclay                 0            2000               -

 

06/14/19            Balance      Limit                Payment

Chase-dsny     2300            5000              850

Amex EvD       1900            4500              850

Barclay AR        300            2800              300

Discover               0            2000               -

Barclay                 0            2000               -

 

07/12/19            Balance      Limit                Payment

Chase-dsny     1450            5000              950

Amex EvD       1050            4500              1050

Barclay AR           0            2800               -

Discover               0            2000               -

Barclay                 0            2000               -

 

08/09/19            Balance      Limit                Payment

Chase-dsny      500            5000               500

Amex EvD            0            4500               -

Barclay AR           0            2800               -

Discover               0            2000               -

Barclay                 0            2000               -

 

Debt free by Sept '19!

Message 7 of 17
HeavenOhio
Senior Contributor

Re: Paying down CC Debt


@Anonymous wrote:

@HeavenOhio wrote:

Welcome, @Anonymous. Smiley Happy

 

Your first priority should be to hopefully avoid adverse action, i.e. credit limit decreases and balance chasing. Start by paying each card down to 67% of its limit. That can be accomplished in your second month of payments with money to spare. Once you've done that, bring each card down to 47% of its limit.

 

The thresholds you want to cross are actually 68.9% and 48.9%. Paying to 67% and 47% will prevent the next month's interest charge from bumping you back over the threshold.

 

After all cards are at 47%, you can pay down as you like, e.g. highest interest first, snowballing small balances first, or aiming for a (slightly) quicker score gain.


These thresholds are for FICO scoring, and while that might pay a large part in issuers initiating AA, it's possible that other factors are much more critical.   So I might still prioritize interest reduction over paying off to thresholds.


If scoring were the prime objective, I'd have suggested getting to 29% before moving to high interest first or another method. If it turns out that the OP is balance chased anyway, I'd simply revert to getting the balances down the fastest way possible, which would be to go with the highest interest first.

 

If the situation were more daunting, I'd have suggested getting to 87% first (which is still an option). But in this case, the OP can get to 67% pretty quickly. Still, high interest first can be incorporated into the earlier payments by getting all cards to 67% (high interest first), then 47% (high interest first).

Message 8 of 17
Anonymous
Not applicable

Re: Paying down CC Debt

Seems to me, as long as op will be debt free by Sept, how FICO score varies before September probably is not that important in the end.

Unless he wants to app before Sept I guess.
Message 9 of 17
Anonymous
Not applicable

Re: Paying down CC Debt


@Anonymous wrote:
Seems to me, as long as op will be debt free by Sept, how FICO score varies before September probably is not that important in the end.

Unless he wants to app before Sept I guess.

The danger, though, lies in keeping the high balances on the other cards if he only pays one off a month, in addition to not really helping his payment history portion of his score. If for any reason the poop hits the fan, & his plan of paying one off a month derails, he will still have several cards with very high UTL ratios that could be closed or balance chased if times get rough & a payment is missed. It's the OP's choice in the end, but I personally think getting all accounts down is a safer strategy and has a better chance of keeping all his cards open. Just my 2 cents...

Message 10 of 17
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