Starting over

[Anonymous]

I need advice...

My household income is about 250k and we still managed to rack up cc debt. I missed 2 payments this winter completely by accident. This lowered the credit limits on all the cards that I've had in good standing for years! So now my utilization is high 👎🏼 And my credit score fell 150 points!

next month I plan to pay off 48k in cc and 30 in student loans. This is where I need advice.

Do I pay everything to zero? Or pay everything to 10%? I'd love to wake up being completely debt free, but I also really need my score to go up. How long will it take? I worked so hard to have decent scores by busting my butt to make good money and now I'm just screwed and I really want to invest after I pay balances. I'd feel better if my scores were back up. Thanks 🙂

[CYBERSAM]

I'll vote for AZEO method!

No point in pay interest rate if you don't have to.

[Credit_Master]

One of the things I have learned by frequenting this board is that late payments will kill your score as you have found out. I missed a payment on my Discover card one time and realized it the next month when I went to pay. I contacted them and since I had great on time payments and it was my first missed payment they waived the late fee and didn't report it. I guess it depends on who the card(s) are with and your standing with them. If it was recent I would contact them and see. You have nothing to lose. As mentioned above the AZEO method is the go to for maximizing your score as far as credit cards go. I am sure some of the other more versed members with chime in and give their advise. 

[CivalV]

Same thing happened to my boyfriend. He had better credit than me and his score got hit by something and went down 100+ points. He gave up on the whole credit thing smh

[Anonymous]

If you have the resources....PAY THEM ALL OFF

Use AZEO method (one card with balance at statement cut date)

Focus on contacting those 2 late payment creditors and see about good will (there may be hope)

Read more here about managing credit

PIF (pay in full) every cc (except one if practicing azeo) from here on out.

Use credit to your advantage. (i.e. if you use a 0% BT or use cc's or whatever, make sure to have the cash to pif at all times)

Dont ever use a cc to purchase something you cannot afford

You will become a master!

[Appleman]

This is also a good time to look at YNAB or another budget program. I have many high earning friends that never figured out their relationship with money and are in a similar boat as you. My college-aged daughter has more financial freedom than a lot of people because she has no debt. And, she is also frugal and rarely spends money.

You are luckily in a good spot with a great income. If it were me, I would pay down the unsecured debt and look at finding a low rate for the student loans. This would give you time to build up a saving cushion that could carry you through 6-12 months of expenses in case something bad happens (like a pandemic). At that point knock out the student loans (rates for re-finance are good and that debt does not go away even in bankruptcy)

Good luck!

[Anonymous]

Thank you! I had to look that up! I just paid everything off, but have my one credit card that earns miles that I'm putting all household expenses (cell phone, utilities, etc.) on and paying it in full every month. I feel so freeee! Hoping to watch my score get back up!

[Anonymous]

Just learned what AZEO is, and I'm doing it. Paid everything off, put more money in savings and using 1 card now that earns miles. Thank you for your message!

[DaveInAZ]

---

@Anonymous wrote:

Just learned what AZEO is, and I'm doing it. Paid everything off, put more money in savings and using 1 card now that earns miles. Thank you for your message!

---

Yes, AZEO - All Zero Except One - maximizes your credit score. And have that one card under 10% of credit limit, and credit reports round up, so 9.1% utilization equals 10%, you need 8.9% or lower.

And if your household income is $250k you must have a busy life, many/most credit cards will let you set automatic payments to pay your statement balance in full monthly automatically.

[Revelate]

---

@DaveInAZ wrote:

---

@Anonymous wrote:

Just learned what AZEO is, and I'm doing it. Paid everything off, put more money in savings and using 1 card now that earns miles. Thank you for your message!

---

Yes, AZEO - All Zero Except One - maximizes your credit score. And have that one card under 10% of credit limit, and credit reports round up, so 9.1% utilization equals 10%, you need 8.9% or lower.

And if your household income is $250k you must have a busy life, many/most credit cards will let you set automatic payments to pay your statement balance in full monthly automatically.

---

I would still vote for minimum payments... flexibility if something happens while still protecting against late payments.

Honestly with banking all done by phone these days with incredibly few exceptions, even to pay all of the lenders that even I have in my credit portfolio would be 10-15 minutes a month and honestly most of the cards don't get used.  Last 3 months only using Chase cards I spent maybe 10 minutes total.