@eyam wrote:Hello @Aim_High, thank you for your response. I've pulled your questions and entered my responses in blue.
Welcome to My Fico Forums, @eyam.
Thank you, happy to be here.
Your credit card utilization is alarmingly high, and I'm surprised lenders haven't already taken adverse action.
Well, I hope to have this rectified before it comes to that.
How long have your balances been so high?
For about 12 months
Did you have a personal emergency or suffer a huge loss of income?
Yes, a job loss was a bit factor along with some unexpected bills that took priority. More importantly, the most contributing factor was a major lack of financial literacy and responsibilty (had I been saving properly, a job loss would not have affected my repayment capabilities). I was putting my wants over my needs and not budgeting properly. I have a new job now and have learned my lesson. Now I'm ready to give myself a second chance to do things right this time. I've since taken a serious look into my financial situation and created a budget for myself that includes, monthly bills, debt payments, and savings.
Unless there is some unusual circumstance, getting your budget in shape would be the first priority.
Duly noted and done.
Next, your posting mentions the balances by card but you don't tell us your APRs on each card or the minimum payments due. Those would help with formulating a payoff strategy.
NFCU Flagship - 17.49% - min pmt: $200 ($9,620.77/$10k)
NFCU CashRewards - 17.49% - min pmt: $25 ($1,199/$1.2k)
Discover - 22.99% - min pmt: $58 ($1,931/$2k)
Capital One QS - 22.99% - min pmt: $25 (PIF) ($0/$500)
Bank of America - 22.99% - min pmt: $35 (just PIF today, watching for trailing interest) ($0/$500)
You don't tell us how much you can afford to pay per month towards debt. There is no mention of income. Do you have any assets which could help you pay off the debt? Your total $13,181 debt is high, but for some people that could be paid off quickly; the debt is relative to the income or ability to repay.
I am able to pay $1,200/month toward debt
Income is $100k
No assets currently
Your personal utilization rates at 96%, 100%, 97%, 86%, and 0% (on a $500 CL card.) YIKES!!!
Your AU utilization is not much better at 60% and 80%. As pointed out, your AU cards aren't really helping you much.
Correct, will be removing myself from those
Who is primary on those AU cards? Is the debt yours, joint, or the responsibility of the primary cardholder? What are the primary cardholder's plans to repay that debt?
Primary on those cards are my brother, he will be paying them off in a month or two, but I've already removed myself from the Amex MR today, Removing from Apple Card next if CLI doesn't work.
Debt is all responsibility of primary.
Getting CLIs would be one way to help with overall utilization, but I don't think any lenders would consider that on any of your primary or AU accounts due to the high balances. But it might be worth a phone call. Has your primary on Apple card asked for an increase? With that much usage, it might merit a higher limit.
I will ask him to request a CLI on the Apple Card, if that does not pan out, I will remove myself from the card.
You won't be able to move CL with NFCU between your Cash Rewards and Flagship Rewards; they don't allow that at this time.
Out of curiosity, when did they stop doing this? I remember seeing others being able to reallocate credit limits to another card and close the original card. Haven't seen a post about this in a while though.
I agree that a personal loan might be a good idea, but you say that it's not possible. Is that due to your current employment status/income?
I requested this from my local credit union, but I'm not eligible at this time due to my length of time at my new employer. I was preapproved for other personal (predatory imo) that I do not feel comfortable accepting as I feel they would do more harm than good when comparing the interest rates with what I am currently paying.
Thanks for those responses, @eyam. I also went through a period of increased debt due to a prolonged major career transition, so I can empathize with your situation. I agree with @Kforce that your situation seems very workable in the short-to-mid term if you stick to the task. I'm glad to see that you've recognized the need for more attention to budget and have worked out a plan! Good job! 
It's great that you've already paid down the Bank of America and I'm relieved that the AU accounts are not your responsibility. As you pay down the utilization on your cards, closing the AU cards should help your profile since utilization on them is also fairly high. (Unless your brother quickly pays those balances down or is able to get a CLI, which could change the variables.)
That just leaves you with a pretty simple debt load compared to what I encountered and what I see with other case studies on My Fico. You've got three cards carrying debt:
- NFCU Flagship - 17.49% - min pmt: $200 ($9,620.77/$10k)
- NFCU CashRewards - 17.49% - min pmt: $25 ($1,199/$1.2k)
- Discover - 22.99% - min pmt: $58 ($1,931/$2k)
The two primary strategies of paying down debt are either the "Debt Snowball" or "Debt Avalanche." As outlined >here in an article from Investopedia< the snowball pays off the lower balances first while the avalanche pays off the higher APRs first. For many cases, I recommend the avalanche since it can save a substantial amount of money. That's especially true if someone will be taking years to get all debt under control or if some APRs are predatory. In your case, the method you select is more of a "wash" since the APRs are close, the balances are fairly close, and your income will allow repayment within a year. So in your case, I agree with @SouthJamaica that the first priority is to reduce individual account utilization across all accounts. The highest breakpoints for FICO scoring are at around 68% and 88% (See >THIS LINK< for a recent post I made which also links to a more in-depth My Fico article.) So I would suggest initially reducing all cards to below 88% and then below 68%. Now you can breathe since adverse action may be a little less likely with only moderate utilization on all cards. Then, use the "snowball" method to pay down the remaining debt. While snowball may be a little more expensive than focusing on lowest APR, it's negligible in your case and there is a psychological boost to watching balances turn to zero. The other advantage to snowball is that with multiple cards carrying balances, there are minimum payments associated with each one. Snowball allows the money that would have gone towards other card min payments to go towards the total debt, which accelerates the process as you proceed, err the "snowball" name as a snowball rolling downhill. With each card payoff, you have more and more money from budget available to pay larger amounts on remaining debt.
Unfortunately, Navy Federal CU stopped doing CL consolidation or transfers about six to twelve months ago, according to multiple reports on My Fico. The only (early) exceptions seemed to be for someone who was transferring for the sole purpose of being able to do a large balance transfer, but I haven't even seen reports of that being allowed lately. Many in our community hope they will reverse this policy but it could be a permanent change.
Thank you @SouthJamaica @Kforce and @Aim_High for your valuable input and warm welcome.
Funny enough, we were thinking the same thing as I put together my snowball chart last night, so I have that starting next month.
I thought about some balance chasing, but at this point, I'll just be happy to not have that debt hanging over me haha. I don't think NFCU will balance chase, at least the data doesn't suggest it from my research. Can't say much for Discover though, not entirely sure on that one.
I took your advice regarding individual utilization and paid two of the three of the remaining accounts down to 87.5%, the third being the Flagship which I will do the same on next week.
Thank you for linking those posts @Aim_High, a good read, indeed. I'll be sure to bookmark them to have for reference.
I'm going to start a new thread in the Rebuilding section to document my journey, or if it's more appropriate - Mods- could you move this one there? I will keep it updated with my progress.
I have to admit, I became a bit discouraged the other day as I was checking my accounts and completely forgot that I have a Kay Jewelers credit card with a balance of $589.49/$1,500. It's set to autopay and I don't even touch the card. So I had to factor that into my snowball table and rework things a bit. Happy to say now that I just paid it in full and closed it. I know some would've kept it open, but I don't like having open cards that I don't plan on using. They also wanted me to resubmit a "soft application" so they can rework my terms (can't remember verbatim how they explained it). Apparently, it's common for them to do it every few years so they can determine your credit limit.
Long story short, after paying that off, in the first month of my snowball, here's where I stand:
I've been slowly chipping away at these balances and here's an update:
FEBRUARY
NFCU Flagship - 9,620/10,000
NFCU CashRewards - 1,199/1,200
Discover - 1931/2,000
Capital One QS - 0/500
BofA Americard - 431/500
Amex Platinum - NPSL (0% util)
---------
Apple Card (AU) - 5,959/10,000
NFCU MR (AU) - 1,253/1,800
Amex Gold (AU) - NPSL (0% util)
MARCH
NFCU Flagship - 8920.93/10,000
NFCU CashRewards - 850/1,200
Discover - 1750/2,000
Capital One QS - 0/500
BofA Americard - 0/500
Kay Jewelers 0/1,500 CLOSED
Amex Platinum - NPSL (0% util)
---------
Apple Card (AU) - 4,000/10,000
NFCU MR (AU) - (REMOVED AS AU)
Amex Gold (AU) - NPSL (0% util)
I haven't checked my FICO scores for any changes yet. Just going to focus on paying as much as possible as fast as possible and sticking to my budget. I may check them mid-year (June, perhaps).
Another one bites the dust! Just paid off my NFCU CashRewards card. It's the end of March and here are my final numbers:
FEBRUARY
NFCU Flagship - 9,620/10,000
NFCU CashRewards - 1,199/1,200
Discover - 1931/2,000
Capital One QS - 0/500
BofA Americard - 431/500
Amex Platinum - NPSL (0% util)
---------
Apple Card (AU) - 5,959/10,000
NFCU MR (AU) - 1,253/1,800
Amex Gold (AU) - NPSL (0% util)
MARCH
NFCU Flagship - 8920.93/10,000
NFCU CashRewards - 850/1,200
Discover - 1750/2,000
Capital One QS - 0/500
BofA Americard - 0/500
Kay Jewelers 0/1,500 CLOSED
Amex Platinum - NPSL (0% util)
---------
Apple Card (AU) - 4,000/10,000
NFCU MR (AU) - (REMOVED AS AU)
Amex Gold (AU) - NPSL (0% util)
END OF MARCH
NFCU Flagship - 8920.93/10,000
NFCU CashRewards - 0/1,200 (PAID IN FULL)
Discover - 1750/2,000
Capital One QS - 0/500 (GOT A NICE LITTLE $100 BUMP)
BofA Americard - 0/500
Kay Jewelers 0/1,500 CLOSED
Amex Platinum - NPSL (0% util)
---------
Apple Card (AU) - 3829/10,000
NFCU MR (AU) - (REMOVED AS AU)
Amex Gold (AU) - NPSL (0% util)
Score updates: EX: 665 TU: 667 EQ: Not sure | I'm using score updates from BofA/Discover and Experian Membership.
My goal this month is to pay $1,321 toward Discover, and $196 toward my NFCU Flagship (based on my snowball table). It feels really good to watch these balances get chopped down. If I keep up this pace, my CC debt will be wiped out by December.
I do have a question for those that may have some insight. For the Apple Card, I know others have mentioned this before but is it a good idea to remove myself as an AU right now as it is providing me with some util padding? If I remove myself now, my overall utilization will go up. The main account holder on it has not been spending and is actively working to pay it down. Just not sure what I should do there. As always, I appreciate the advice and guidance.
@eyam wrote:Another one bites the dust! Just paid off my NFCU CashRewards card. It's the end of March and here are my final numbers:
FEBRUARY
NFCU Flagship - 9,620/10,000
NFCU CashRewards - 1,199/1,200
Discover - 1931/2,000
Capital One QS - 0/500
BofA Americard - 431/500
Amex Platinum - NPSL (0% util)
---------
Apple Card (AU) - 5,959/10,000
NFCU MR (AU) - 1,253/1,800
Amex Gold (AU) - NPSL (0% util)
MARCH
NFCU Flagship - 8920.93/10,000
NFCU CashRewards - 850/1,200
Discover - 1750/2,000
Capital One QS - 0/500
BofA Americard - 0/500
Kay Jewelers 0/1,500 CLOSED
Amex Platinum - NPSL (0% util)
---------
Apple Card (AU) - 4,000/10,000
NFCU MR (AU) - (REMOVED AS AU)
Amex Gold (AU) - NPSL (0% util)
END OF MARCH
NFCU Flagship - 8920.93/10,000
NFCU CashRewards - 0/1,200 (PAID IN FULL)
Discover - 1750/2,000
Capital One QS - 0/500 (GOT A NICE LITTLE $100 BUMP)
BofA Americard - 0/500
Kay Jewelers 0/1,500 CLOSED
Amex Platinum - NPSL (0% util)
---------
Apple Card (AU) - 3829/10,000
NFCU MR (AU) - (REMOVED AS AU)
Amex Gold (AU) - NPSL (0% util)
Score updates: EX: 665 TU: 667 EQ: Not sure | I'm using score updates from BofA/Discover and Experian Membership.
My goal this month is to pay $1,321 toward Discover, and $196 toward my NFCU Flagship (based on my snowball table). It feels really good to watch these balances get chopped down. If I keep up this pace, my CC debt will be wiped out by December.
I do have a question for those that may have some insight. For the Apple Card, I know others have mentioned this before but is it a good idea to remove myself as an AU right now as it is providing me with some util padding? If I remove myself now, my overall utilization will go up. The main account holder on it has not been spending and is actively working to pay it down. Just not sure what I should do there. As always, I appreciate the advice and guidance.
Congrats on your snowball debt payoff, @eyam! Nice work!
To recap, it looks like you've lowered utilization by the following since you started:
- NFCU FSR: 96% to 89%
- NFCU CR: 100% to 0%
- Discover: 97% to 88%
- BofA: 86% to 0%
- Apple: 60% to 38%
By the end of the month, you'll have
- NFCU FSR: 87%
- Discover: 21%
- Apple: 38% (or less)
- All other cards at 0%
So I'm guessing that starting in May, your only debt will be the NFCU FSR (not counting the AU debt on the Apple card.)
Since your brother is not charging to Apple card, has paid the debt from 60% down to 38%, and the high $10K limit is helping your overall utilization right now, I would suggest waiting at least a few months before removing yourself as AU on that card barring any reversals by your brother. As you say, right now it is helping your overall utilization calculations.
Keep your nose to the task and you'll be free from this burden before you know it! Then, that is a VERY good feeling and you'll be motivated to not ever find yourself in this situation again. Congrats!