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Advice on UTILIZATION Desperately needed !!!

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takeshi74
Senior Contributor

Re: Advice on UTILIZATION Desperately needed !!!


@Anonymous wrote:

Will I be looking at a considerable score boost if I pay these all down substantially?  I know that my UTIL is whats killing my scores, as there are no recent baddies, and collections have aged off or been paid, but for one.

Then you've answered your own question as well as we can.  We can't tell you that you'll gain X points for reducing revolving utilization by Y%.  However, utilization is a significant risk and scoring factor and general advice is do not exceed 30% but optimal is only 1 balance reporting at 10% or less.  Lower is generally better as long as you don't have 0 balances across the board.  Calculate your overall and individual utilization and see how far off you are from optimal.  My guess is that you would see a signficant improvement as you have a maxed card and several others that are very high.

 

While I agree that scores aren't a priority for the OP at this point utilization is still a consideration given that it is a significant risk factor and paying only the minimums on high utilization and maxed cards is a great way to get into more trpuble.  It's not really a matter of the minimum payments but making only the minimums will prolong the time that the high and maxed cards are high and maxed.  Short term high utilization generally isn't an issue but prolonged high utilization can lead to adverse action.

 

Get the highest utilization cards down first ASAP.  One is already maxed at 98% and this needs to be brought down immediately.  There are also two others over 70% and yet another that isn't much under 70%.  Once at about 50% on all then focus on APR.  If picking off the smaller balances suits the OP then use that approach as well.

 


@Anonymous wrote:

NFCU Secured:  $5 / $700 CL  (Recently opened to help UTIL)


Definitely do your utilization math.  It's helping a little but not much.  With it you're at 67% overall.  Without you'd be at 71%.

Message 11 of 15
Jesse3581
Established Member

Re: Advice on UTILIZATION Desperately needed !!!

I'm suprised more people haven't chimed in to help.  OP, I think you're doing absolutely the right thing -- pay off your debt!  But as far as scoring purposes go, for the best results, the less cards that have a balance, the better!  Keeping $5 or $20 on a card is HURTING you.  In an ideal world, only one card would report a balance and all the others will show $0. On that card that does report, try to get that balance down to under 9%.

$1750$5200$2000$7500$2000$2000
Message 12 of 15
lg8302ch
Senior Contributor

Re: Advice on UTILIZATION Desperately needed !!!


@Anonymous wrote:

@Anonymous wrote:

My APRs:

 

CareCredit:  0% for 18 months, 22.9% after (not until 2016)

Barclay:   24.9%

CreditOne:  18.9%

FingerHut:  Unknown

NFCU:  14.9%


1. Pay minimum on everything

2. Put all remaining funds to cards in this order:

    a. Barclay

    b. Fingerhut

    c. CreditOne

    d. NFCU

    e. CareCredit

3. Once CreditOne is paid off, make the call to close their account.  They are predatory lending at it's finest.

4. Maintain low Util, PIF balances every month to avoid accruing interest

5. Enjoy benefits of better credit.


That sounds like excellent advice to me and once Barclays is paid off make a call to lower APR!   All they can say is NO but if you don't try it will stay high. Repeat every 6 months until you are happy with APR..well that might not work all the way but hopefully part of the way Smiley Happy

Message 13 of 15
Anonymous
Not applicable

Re: Advice on UTILIZATION Desperately needed !!!


@Anonymous wrote:

Hi all!  So as a disclaimer -- DON'T JUDGE LOL!  I am here to get some input on my scores, and paying down my cards.  Presently, I sit at the following:  498 EQ, 515 TU, 525 EX.  Horrid, I know... but I hit a rough spot due to job loss and finally secured a great paying nursing job here in L.A.  Below is my current UTIL on my cards and revolving accounts:

 

CareCredit:  $1600 / $3000 CL

Barclay Visa Apple:  $2940 / $3000 CL

CreditOne:  $299 / $400 CL

NFCU Secured:  $5 / $700 CL  (Recently opened to help UTIL)

FingerHut Revolving:  $200 / $400 CL

 

So, my plan is to pay them down considerably -- goal is to get my CreditOne down to $20 (reporting), Barclay to $1500 (reporting), NFCU staying very low and FingerHut paid to $0.00, all within the month.  Will I be looking at a considerable score boost if I pay these all down substantially?  I know that my UTIL is whats killing my scores, as there are no recent baddies, and collections have aged off or been paid, but for one.  ANY and ALL advice would be great.  A friend was in a simialr spot, paid his cards all down to about 25%, and his score literally went up 100 points in 30 days!!!  Please advise, credit oracles!


I'm going to disagree with everybody else on the order that you should pay things down. I think that the order should be:

 

1) NFCU

2) Finger Hut

3) Credit One

4) Barclay

5) Care Credit

 

Why this order? You'll see the biggest decrease in interest costs this way. NFCU and Fingerhut should be really easy to pay off and get back onto the grace period. This saves you more on interest than the incremental change from Barclay to the next highest. After those go to 0, I would pay off Credit One and close it. It doesn't have a grace period, so you owe interest on every purchase. Additionally, the add on fees for everything probably overcome the reduction in APR. You have a different, better secured card (NFCU), which should be your primary spend card.

 

You are still on the 0% rate for Care Credit, so I would do that one last. That leaves Barclays, nominally your highest rate, to do fourth. This one is going to be tough, but you're going to have to do the best you can with it. As the 0% on CareCredit comes a couple months from running out, you're going to have to shift your payments to getting rid of that limit, with the goal of removing all of that debt before the 0% runs out. Additionally, the 0% is typically timed to the day of application, not the first statement, so it can run out in the middle of your payment period. 

Message 14 of 15
Anonymous
Not applicable

Re: Advice on UTILIZATION Desperately needed !!!

Forgot to mention that paying the minimums on all cards is required. You shouldn't be paying down cards until all minimum payments have been made. 

Message 15 of 15
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