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Does anyone have any advice on what to pay down first to increase scores?

Regular Contributor

Does anyone have any advice on what to pay down first to increase scores?

I'm in kind of a weird situation...  and have just recently purposefully gotten a few new trades to have a new car, furniture, computers, etc. so that they could be paid off (well not the car PIF- need to pay the other stuff to help my DTI) by the end of 2016 so that I could hopefully qualify for a mortgage after these are paid. So long story short,  I have recent inquiries and several new accounts, and four 30 day lates on cc's from May 2014 that I know all need TIME to fix (tried GW, got nowhere), I get that, BUT... for the things I plan to pay down on, what's the best method of attack for order or amount? I mean I can't pay everything at once, but maybe an extra $500/month? 

 

Chase Freedom $523/ $2000 -0% until Sept 2016 - I plan to use this for groceries/gas and pay in full or close to it, monthly, so maybe ignore this one?

Barclaycard Visa with Apple Rewards  $1070/$3200  0% for 17 months remaining

Conn's Furniture and Appliances Store Card $2166/$3000 0% for 34 months remaining

Walmart Store Card $951/$3000

Amazon Prime Store Card $1774/$6000

eBay Mastercard $790/$2500

 

These are the big ones... I do have other cc's as well, but they are at $0 or like less than $20 balances, so they aren't a concern right now. I know those 0% ones are sooo good, but the high balances are keeping my score down. Ugh.   Any suggestions on which things or how much I should pay each or the order?  Pay the $500 all to one? A little here and there?  Just curious if you've had experience with the different options here and the possible outcomes from trying this.  (Yes, I do also have a car loan, a personal loan, and a student loan to pay down, but those aren't really anything I can strategize, to my knowledge.)

 

THANK YOU!!

 

STARTING OVER. Hit a bump in the road with an unemployed hubby, 700s turned to 400s pretty quickly when we couldn't pay.
Before hardship: 700s
Before filing CH 7: 490s
After CH 7 discharge reported to bureaus:
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TransUnion 614
Experian 626
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4 REPLIES
Valued Member

Re: Does anyone have any advice on what to pay down first to increase scores?


720dream wrote:

Chase Freedom $523/ $2000 -0% until Sept 2016 - I plan to use this for groceries/gas and pay in full or close to it, monthly, so maybe ignore this one? - 26%

Barclaycard Visa with Apple Rewards  $1070/$3200  0% for 17 months remaining - 33%

Conn's Furniture and Appliances Store Card $2166/$3000 0% for 34 months remaining - 72%

Walmart Store Card $951/$3000 - 31%

Amazon Prime Store Card $1774/$6000 - 29%

eBay Mastercard $790/$2500 - 31%

 

 

 


Here would be my plan of attack, take it with a grain of salt.  The biggest hit is going to be from the Furniture store card - you're at 72% of your limit there. I think I would try to get that down to around 35-40% first, if you really want to care about your scores.  If you get it to 35%, you'll probably have a roughly 30% utilization overall.  Once you're to that point, try to get Chase and Barclay down before your 0% runs out.  Then, I'd hit the last 3 according to their interest rates.



Beginning Scores 5/10/2014: EX 604, EQ 587, TU 658 Current 11/9/2015: EQ 665 TU 665 (FAKO) EX 659 (FAKO)
Message 2 of 5
Established Contributor

Re: Does anyone have any advice on what to pay down first to increase scores?


720dream wrote:

I'm in kind of a weird situation...  and have just recently purposefully gotten a few new trades to have a new car, furniture, computers, etc. so that they could be paid off (well not the car PIF- need to pay the other stuff to help my DTI) by the end of 2016 so that I could hopefully qualify for a mortgage after these are paid. So long story short,  I have recent inquiries and several new accounts, and four 30 day lates on cc's from May 2014 that I know all need TIME to fix (tried GW, got nowhere), I get that, BUT... for the things I plan to pay down on, what's the best method of attack for order or amount? I mean I can't pay everything at once, but maybe an extra $500/month? 

 

Chase Freedom $523/ $2000 -0% until Sept 2016 - I plan to use this for groceries/gas and pay in full or close to it, monthly, so maybe ignore this one?

Barclaycard Visa with Apple Rewards  $1070/$3200  0% for 17 months remaining

Conn's Furniture and Appliances Store Card $2166/$3000 0% for 34 months remaining

Walmart Store Card $951/$3000

Amazon Prime Store Card $1774/$6000

eBay Mastercard $790/$2500

 

These are the big ones... I do have other cc's as well, but they are at $0 or like less than $20 balances, so they aren't a concern right now. I know those 0% ones are sooo good, but the high balances are keeping my score down. Ugh.   Any suggestions on which things or how much I should pay each or the order?  Pay the $500 all to one? A little here and there?  Just curious if you've had experience with the different options here and the possible outcomes from trying this.  (Yes, I do also have a car loan, a personal loan, and a student loan to pay down, but those aren't really anything I can strategize, to my knowledge.)

 

THANK YOU!!

 


If I were you I wouldn't worry about those 0% interest one for time being. I will pay down the Amazon, Walmart and eBay first. Will pay down the one with highest interest rate. After all those done.  I'll pay down the furniture store one. With those normally it's 0% for 36 months or whatever but if not paid off in 36 months they tack all 36 months interest on your 37th statement. That's how I will tackle it since your not planning to buy a house till end on 2016. Also, depending on your income they might require you to pay off some of those other loans to get you approve for the home loan

Message 3 of 5
Established Contributor

Re: Does anyone have any advice on what to pay down first to increase scores?

I feel you have too much debt right now to be worrying about a mortgage. My plan of attack would be to put all my effort into becoming debt free with my revolving accounts (credit cards) and my personal loans. You have over $7200 owing in your revolving accounts (plus however many other cc's you have not listed with the small balances) - it will take you 14 months just to pay off your revolving accounts with the $500/month you mention (perhaps less depending on what this $500 is on top off since you say it is "extra").

 

I don't know what the balance is on that personal loan, the interest rate, or the remaining term so it's difficult to plan w/o that info.

 

Nor do I know your credit score, again, hard to plan w/o that...

 

First thing to look at is consolidation -  based on you credit score, if you consolidated your revolving accounts and personal loan into one would it save you money? Factors are: current interest rates on all revolving accounts, interest rate on the personal loan, and the interest rate on the potential new consolidation loan; as well, what the new hard inquiry for the consolidation loan would do to your score negatively (hard to tell); and what getting 5+ revolving accounts fully paid off would positively do to your score (hard to tell). You need to sit down with a calculator, take all the factors I listed into account, and determine what your final cost would be, including interest payments over the term. If it saves you money then take that route.

 

If it doesn't save you money then simply pay off the revolving accounts based on interest rate. After the accounts with interest rates are paid off then begin with the smallest balance of the 0% interest rate and snowball the the debt - to be clear - continue paying the minimums on those 0% that would NOT let you go over the term where interest would begin while putting anything extra towards the one with the smallest balance. Each time one is paid off take the cash you were putting towards that one and start throwing it on the next lowest balance, in addition to what you where already paying on it. Rinse and repeat. IMPORTANT: make sure none of your 0% accounts are not interest DEFERRED; meaning if you go over the 0% interest term than you will most likely be required to pay ALL the interest that was deferred. If they are, be sure not to go over the term (also check about late payments - sometimes that also will trigger you needing to pay the deferred interest).

 

Then, once the revolving accounts are done take all the cash you were throwing at those and add it to whatever you are already paying towards the personal loan (and confirm that there are no early payment penalties). This is important also - do not think that of the extra cash you have each time one of the accounts is paid off as "yours", think of it as the creditors. Give it to them; do not use it to buy things you do not really need just becuase it seems you have "extra" money.

 

Lastly, please, whatever you do, do not continue to use your credit for more stuff. Sure, use it for things you must buy anyway, food, etc, but other than that don't keep adding more debt and don't have a balance report on more than one card.

 

I know this is alot of info; just take it slowly and be methodical. You need to know the answers to the questions I listed to know which way to move forward. 

 

Note on the late payments reporting - until those late payments have a negligible effect on your score continue trying to get them removed - I would just not stop even if they are negligible; mortgage brokers don't like to see missed payments and sometimes make the approval contingent on those being removed. Once a month or so just call again and give it a go. I know it seems like you've lost that battle but the likeyhood is that each time you call you will speak with a new person, and it will be an older late - each new person is a new ear and the older it is the more likely they will be simpathetic. You may want to strategically mention non-chalantly that you are trying to clean things up for a mortgage (it took almost a year but it worked for me).

758 TU FICO 08 (09/01/2017)
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Goal: 800+
Message 4 of 5
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Established Contributor

Re: Does anyone have any advice on what to pay down first to increase scores?

I'd pay Conn's down below 30%. Then I'd start paying the lowest balance card first until it was $0. Then I'd work my way up the list, using the money I had been paying toward each account toward the next highest "Snowballing." Of course, you have to continue minimum payments on each to stay current. I'd add a few dollars to the min. payment on each if possible.  

 

 





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