Over My Credit Limit

[Williamscx1]

Hello! New forums-user here...

I'm trying to rebuild my credit in order to mortgage a piece of land soon. I don't know all of my 3 scores, but I purchased my Equifax Fico8 score and it's 607. I have a good mix of accounts in good standing, but I have 3 maxed out credit cards that are clearly hurting my score. This is what they are:

Credit One Visa- Limit $800, $959 balance

Credit One MC- Limit $800, $739 balance

First Premiere- Limit $700, $682 balance

What's the best course of action? My first plan was to pay $200 this week on the over-limit card to bring it below the limit line. I need to develop a clear plan to follow. I want immediate impact to raise my scores. I can't just pay them all off right now without depleting my savings so should I just pay more than the minimum each month and let it runs its course over time?

Thanks!!!

[RobertEG]

Being over the limit, or even over, for example, 90%, has serious scoring implications.

When you pay down the % util, theoretically, only the current % util is used in scoring, so you can recover.

However, many creditors will, if % util has been high  for an extended period, reduce your credit limit as the debt is paid down.

This leads to your % util remaining high, even as you reduce your debt balance.

My concern would be paying down the % util as soon as possible to avoid credit limit decreases, and thus inability to recover from high prior % utils.

[Anonymous]

I worry that a mortgage may be taking on too much if you're having trouble managing these small balances.

You really need to be in tip top shape going into a mortgage or it can really jeopardize your financial well being. I say this having seen a lot of folks here squeak into a mortgage then find themselves in deep trouble one unexpected life event later. 

[Williamscx1]

Understood. We already have a mortgage and home and have no problems affording it and paying all of our other bills on time- but these credit cards...GAH! We're not getting another home mortgage, just a small land mortgage. But great advice- thanks!

[Anonymous]

Get on a few months or forever  STRICT budget, with your other half on board!

1) deplete savings to pay off balances or darn close maybe AZEO.

2) spend 2-3 months of what would have been payments to refresh your savings.

3) dont use credit cards again, unless you PIF before or at statement cut.

4) dont pay minimums or balances when they are due...pay before due date (read #3 again!)

Just be sure to get fully on board with the other half and be strict about this.

Carrying balances and then having to deal with another mortgage/loan payment will

become crazy train time, having to ask yourself which payment needs to be made

and sacrificing others. 

MAKE IT A WIN/WIN not a WIN/LOSE or LOSE/LOSE situation from here on out.

Hope this helps and good luck!

[Cherekas]

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@Williamscx1wrote:

Understood. We already have a mortgage and home and have no problems affording it and paying all of our other bills on time- but these credit cards...GAH! We're not getting another home mortgage, just a small land mortgage. But great advice- thanks!

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Once you start paying the cards down...you have to stop using them. Either cut them up or put them away not easily accessible. Sometimes hard to do but it will help. Although the interest will be an issue as you are paying them down. You may want to try the snowball method (pay smallest to largest balance while paying mins on other accounts) or the avalanche method (paying highest interest rate to smallest, this method will help you pay less in interest).