Solved: Re: 653 to 753 in 5 months! - myFICO® Forums

Anonymous · ‎02-12-2009

Seeing my score at 653 was my wake-up call. Hopefully, seeing my post will be yours. High CC balances will ruin your FICO score! In September, my overall utilization was a shameful 97%. It is 48% now. I know, not the recommended 1-9% but I am working on it. The only inquiry on my report dates back to 28April08. I have 1 CC that reports a balance. I use the other CCs to keep them active but PIF before the closing date.

Remember that a journey of a thousand miles begins with 1 step. Keep chipping away at those CC balances and you will see your scores rise. It won't happen overnight but it will happen. I am living proof.

Message Edited by tonnie39 on 02-12-2009 03:59 PM

Anonymous · ‎02-16-2009

tonnie39 wrote:

I will be receiving $13,200 over the next 6 months. I have a BofA CC with a CL of $10,500. The balance is slightly less than $8000. The interest rate is rather excessive. I have $18,000 in federal student loan debt that has been out of deferrment since 15Jan09 (although I finished my degree in Dec05). My interest rate is 3.960%. I think my best move would be to pay off the CC debt first and continue paying on my student loans. My friends think I should use the entire $13,200 toward my student loans.

In my humble opinion, you should pay off the credit card debt before the student loans. In fact, for me, it's not even a close contest.

Three reasons:

1. The credit card is an unsecured line of credit. I believe the student loan is considered to be an installment account (at least that's what my credit report says about my Sallie Mae loans.) Making all of your payments on an installment loan is actually good for your credit in the long run, especially once you have enough of it paid off.

2. Interest rates and types. The interest rate on your credit card is higher than on your student loan, so paying down that balance will reduce the amount you pay monthly for the priviledge of borrowing money. Also, I believe student loans do not compound the interest rates like credit cards do. Credit cards compound daily (the worst), while I think student loans compound monthly. The difference over time between the two can be huge!

3. You can pay off the total of your credit card debt. This means, after verifying that an entire billing cycle has gone by and your credit card shows a $0 balance, you will now have access to this card without paying interest. Just as you are using cash to buy only what you can afford, applying the same concept to your credit card will actually give you access to that money for a 25-day grace period or so. Just never, ever pay late and always pay the total bill every month.

I understand what your friends mean with respect to bankruptcy laws and what can be discharged, however, this doesn't sound like your biggest problem. If you had recently lost your job and you were worried about not finding another one, then you might think about going the other way. However, let's be optomistic and assume that you will have your job for at least another year or two. With the savings in your interest payments, you will have both bills paid off before you need to worry about your job loss, not just one bill. And, with the work that you are doing on this, I wouldn't foresee financial troubles in your future.

Then, once your credit card is paid off, I would "pay ahead" on your installment loan. This is what I did with my student loans and car payments. I got to the point where I was 6 months ahead on my car loan and 8+ months ahead on my student loans. If I had lost my job, I would have had 6 months with no payments on either and would not have been late. This was very comforting for me, since at the time I worked on commissions, and the winter months brought in half of the money as in the summer. You can't "pay ahead" with credit cards. Oh! And just because I was "paying ahead" on those loans, doesn't mean that the interest wasn't getting lowered every month. By the end of each loan, when I didn't have to skip any payments, they were just paid off early, with a reduction in the total amount of interest paid.

llecs · ‎02-12-2009

Congrats! How did you do it?

Anonymous · ‎02-12-2009

Thanks! I paid all but 1 of my CCs.

MsKiwi · ‎02-13-2009

@Anonymous wrote:
Seeing my score at 653 was my wake-up call. Hopefully, seeing my post will be yours. High CC balances will ruin your FICO score! In September, my overall utilization was a shameful 97%. It is 48% now. I know, not the recommended 1-9% but I am working on it. The only inquiry on my report dates back to 28April08. I have 1 CC that reports a balance. I use the other CCs to keep them active but PIF before the closing date.

Remember that a journey of a thousand miles begins with 1 step. Keep chipping away at those CC balances and you will see your scores rise. It won't happen overnight but it will happen. I am living proof.
Message Edited by tonnie39 on 02-12-2009 03:59 PM

Just goes to show how much utilization plays into fico scores. I bet when you get that balnce to 29% then at 9% you are going to see even better scores. Congrats to you ..this is HUGE!

Anonymous · ‎02-13-2009

100 points in 5 months!?! That's just incredible! Congratulations!

How were you able to stop using your cards as much? Did you switch to cash, stop spending as much, get an inheritance that you put to good use, what?

Tell me. Didn't you feel a great sense of relief every month that those balances got paid down? Like a weight was slowly getting lifted off your shoulders? It did for me.

Keep up the good work. I can't wait to see what your score is when you are below the 9% mark!

Junejer · ‎02-13-2009

Congrats Tonnie. You are at 753 with 48% util. You will probably be in the 790s, if not 800 when you hit 9% or less. Nice job.

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Junejer · ‎02-13-2009

Okay bulbisaur, I had praised Psychic for having the highest score that I have ever seen, but now the throne belongs to you my liege. Very, very well done.

Starting Score: 469
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Anonymous · ‎02-13-2009

(blush blush) Thanks, Byrdman! Psychic still deserves all the praise, really.

Those two points between our scores cannot begin to put me in the same league as Psychic, who has dedicated countless hours to helping and encouraging everyone here. If I could give those two points to Psychic, I would.

Actually, all that really means is that my score was higher on Feb. 10th. But it's nice to be queen, even for just one day. (King for a Day - I think that was a Thompson Twins song...)

Junejer · ‎02-13-2009

Well, 6 points away from the perfect FICO is the closest that I have seen. Psychic was just jazzed to see some movement on his scores. They are typically booooorrrriiiiinnng, they just don't move.

Starting Score: 469
Current Score: 819
Goal Score: 850
Highest Scores: EQ 850 EX 849 TU 850
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haulingthescoreup · ‎02-13-2009

ByrdMan wrote:
Well, 6 points away from the perfect FICO is the closest that I have seen. Psychic was just jazzed to see some movement on his scores. They are typically booooorrrriiiiinnng, they just don't move.

Such a drag to be stuck in the 840's! *sighs*

It's always great to see scores like these. They energize the rest of us! Congrats again.

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
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653 to 753 in 5 months!

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653 to 753 in 5 months!

Re: 653 to 753 in 5 months!

Re: 653 to 753 in 5 months!

Re: 653 to 753 in 5 months!

Re: 653 to 753 in 5 months!

Re: 653 to 753 in 5 months!

Re: 653 to 753 in 5 months!

Re: 653 to 753 in 5 months!

Re: 653 to 753 in 5 months!

Re: 653 to 753 in 5 months!

Re: 653 to 753 in 5 months!

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