FICO Score: What to pay down first?

[ABCD2199]

Post your balances and limits each and I'd be happy to do the math for you!

[Down_2Bizness]

Great post! Thank you.

[BM3]

 Great post. I am so tired of money related anxiety. This is maybe crazy but I feel more free now that I have at least some money available via CC if I must make a change in my life. With one bank account for a couple, I felt like I could never have "escape path" money. Yet I feel this is fool's gold, and the saving one is the real deal. Emergency fund is such a novel concept to some people. I am still wrapping my head around it truly, but I want to at least experience the **bleep** thing. 

[sueblue34]

This post was nothing but the cold hard funny truth.lol I needed this as mu UTL is my only issue. I do have savings(not much) but Im slowly adding to it  and starting today I will work on bringing all my cards down

[LShan82]

good info! 

[c3b4me]

Awesome article! I will heed this advice! I currently have zero collections on my credit reports because I have done the pay for deletion letter to the collection agency. I have also one month of reserve income to date. Still working to stop dining out. I spend too much on dining out and getting my coffee from Starbucks. I looked at my bank statement and saw that I’ve spent a total of $387.73 on restaurants alone. I’ve got to do better. Each month I put $403.00 into my savings account. I don’t touch it for any reason. If I can put a portion of that $387.73 elsewhere such as savings or to my grocery budget, I’d be much better off. I just need to cook at home more. I’m being lazy. I can and will do better. I like this forum. I can see my errors and fix them. You all are so knowledgeable and helpful.

[Muse1956]

I just want to share my story because so many websites and articles 'spank' people for having credit card debt- and commentators should consider that may sometimes be unfair. Most of all, I would like to hear advice from anyone who actually KNOWS how these scores are calculated so I can most effectively restore my score.

I am going to be 62 next month, and I'm not planning to draw SSI yet. I was self-employed since 1998, but haven't been able to get back into the field without extensive travel now which I can't do. When the economy collapsed, I thought I'd be able to make a comeback after a couple years- so...I used my credit cards to avoid taxes and penalty for necessary, but premature IRA withdrawals (vicious tax rules- a $1000 expense, like health insurance premium costs $1000, plus 25% (or more) IRS + 9% CA state tax+ 12% tax penalty= $1460, which of course makes the distribution $1460, NOT $1000 anymore) it was just incredible the box they get you into. BTW- if you are self employed, you can NOT, by definition, be unemployed. Anyway....that's how I got into credit card debt- paying taxes, paying my mortgage, paying the now crazy health insurance premiums, and the tax ramifications of doing so.

I have no installment debt. I have two active credit cards from the good old days- a MasterCard with 25K limit/owing 18.5K @ 16%, and a DISC with 19.4K limit/owing 17.5K @5% (was a balance transfer). I paid off my mortgage (oops- guess THAT was a mistake), and now own an expensive house (850K+) that I can't refinance- I tried. I have a old HELOC from Countrywide (remember them?) with a balance of about 18K, showing as a 'closed account' on my report, as it has entered the repayment period since BoA killed these lines of credit when they bought Countrywide. It's at 4% so that's a low priority payoff, even though it's not tax deductible any more- my property taxes already exceed the new trump total tax deduction of 10K.

So. I need help please: should I pay EACH credit card down to below 68.9% utilization as has been suggested? I'll have to pay income tax on the funds drawn ($5500), but if it helps my score maybe I can leverage that better score into a personal loan, or a lower rate on the Mastercard? Or, should I pay the MC high-rate card down by $5500 and keep the low interest Discover balance transfer until it expires June 2019?

Is there any possibility that the credit card companies will lower my credit limit if I pay balance down?! I read an anecdote of that.

I also have medical bills that I'm paying direct at 0% interest; these don't show up on my credit report- as long as I keep them out of collections!

I also am in a quandry as to what to say my 'income' is on any credit application. I have a significant SEP-IRA that I am drawing down now that I'm over 59 1/2 years old, though that makes me a bit nervous. I have been saying my income = the amount of income shown on my 1040; I think this is honest but I don't want to get any demand letter saying I committed fraud!

I never imagined I'd be in such a mess after working and behaving my entire life! But, that's for Dr. Phil, I guess.

Thanks for any help you can offer

As of today, my FICO was 643 (Transunion)/642(Experian), the FICO 8s were: 741 (discover)/735 (Mastercard).

[ItsCASHual]

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@Muse1956 wrote:

I just want to share my story because so many websites and articles 'spank' people for having credit card debt- and commentators should consider that may sometimes be unfair. Most of all, I would like to hear advice from anyone who actually KNOWS how these scores are calculated so I can most effectively restore my score.

I am going to be 62 next month, and I'm not planning to draw SSI yet. I was self-employed since 1998, but haven't been able to get back into the field without extensive travel now which I can't do. When the economy collapsed, I thought I'd be able to make a comeback after a couple years- so...I used my credit cards to avoid taxes and penalty for necessary, but premature IRA withdrawals (vicious tax rules- a $1000 expense, like health insurance premium costs $1000, plus 25% (or more) IRS + 9% CA state tax+ 12% tax penalty= $1460, which of course makes the distribution $1460, NOT $1000 anymore) it was just incredible the box they get you into. BTW- if you are self employed, you can NOT, by definition, be unemployed. Anyway....that's how I got into credit card debt- paying taxes, paying my mortgage, paying the now crazy health insurance premiums, and the tax ramifications of doing so.

@I have no installment debt. I have two active credit cards from the good old days- a MasterCard with 25K limit/owing 18.5K @ 16%, and a DISC with 19.4K limit/owing 17.5K @5% (was a balance transfer). I paid off my mortgage (oops- guess THAT was a mistake), and now own an expensive house (850K+) that I can't refinance- I tried. I have a old HELOC from Countrywide (remember them?) with a balance of about 18K, showing as a 'closed account' on my report, as it has entered the repayment period since BoA killed these lines of credit when they bought Countrywide. It's at 4% so that's a low priority payoff, even though it's not tax deductible any more- my property taxes already exceed the new trump total tax deduction of 10K.

So. I need help please: should I pay EACH credit card down to below 68.9% utilization as has been suggested? I'll have to pay income tax on the funds drawn ($5500), but if it helps my score maybe I can leverage that better score into a personal loan, or a lower rate on the Mastercard? Or, should I pay the MC high-rate card down by $5500 and keep the low interest Discover balance transfer until it expires June 2019?

Is there any possibility that the credit card companies will lower my credit limit if I pay balance down?! I read an anecdote of that.

I also have medical bills that I'm paying direct at 0% interest; these don't show up on my credit report- as long as I keep them out of collections!

I also am in a quandry as to what to say my 'income' is on any credit application. I have a significant SEP-IRA that I am drawing down now that I'm over 59 1/2 years old, though that makes me a bit nervous. I have been saying my income = the amount of income shown on my 1040; I think this is honest but I don't want to get any demand letter saying I committed fraud!

I never imagined I'd be in such a mess after working and behaving my entire life! But, that's for Dr. Phil, I guess.

Thanks for any help you can offer

As of today, my FICO was 643 (Transunion)/642(Experian), the FICO 8s were: 741 (discover)/735 (Mastercard).

---

Just for clarification....you mention you paid off the mortgage but have 850K house that you can't refinance? Or do you mean the 18K HELOC you can't refinance? I'm sure some of the more seasoned folks in the forum will have some good advice for you. Stay tuned. 

[Muse1956]

It's the house can't refi, and no I'm not exaggerating 'value'; mine needs work but the comps are in the 950K+ range. There was some dim possibility if my brother co-signed (!), so I had the mortgage agent talk with him direct. Bottom line- Fico<720 was a no-go. BTW- My inquiry was triggered by a promo between Schwab and an online mortgage company (was it quicken?), PLUS, my brother's refusal to believe I couldn't refi- so I tried. When I pointed out my larger Vanguard SEP-IRA to qualify based on actual assets in hand, she indicated what they do is divide the total value of the account by 360 (a 30year mortgage assumed) to arrive at your monthly 'income'  then try to qualify you from there. HAHA when I pointed out the slim chance that I'd be around another 30 years (let alone my brother who is 8 year older), it makes no difference- they just check their little boxes, then say no.

Long story short there is no 'first' mortgage, just the left over HELOC as mentioned.

[srloring13]

What amount are you trying to refinance the house at?  Can you refinance at a lower amount?