Hello everyone, this is my first post on this forum.
I had a very difficult 2008 and signficantly damaged my credit due to a combination of unfortunate personal circumstances and bad planning. I won't go into details but my credit score was significantly impacted and I am currently building my credit back. It currently stands at 630.
I have two revolving credit (CC) accounts that were closed late last year due to past due payments (30/60 days in Sept/Oct/Nov08). The two accounts currently are at 81% bal:lim (total balance $14.5K to a credit limit $18K). I am working on paying those down with a goal of reducing to <30% by the end of this year. The APR for the accounts are 27/30%. I contacted the creditor (Chase) to see if they would consider reducing the APR. They said they could not drop the APR but did offer to convert both accounts to installment loans with a fixed payment plan. The APR would drop to 2.9% (!) which would significantly shorten my time to pay off these accounts. Specifically, it will cost me ~$3500 more for 1 year to keep the current APR vs the proposed IL APR. This sounds great on the surface; however, I am concerned that the change in reporting will negatively impact my FICO score due to a change in reported available credit and the addition of new installment loans on my report.
Including these two closed LOC, my available credit is $92K with an overall bal/limit of 32%. If these two account change to ILs, I'm thinking that the limit would drop by $18K to $74K which would raise my credit usage from 32% to 40%. Am I wrong here?
Can anyone shed some light on this for me? I do not understand what impact this would possibly have on my credit score and I am looking to improve to at least a 660 by ~September. I do not know whether or not I should take this offer. Any advice is welcome!
Message Edited by KevAC on 02-03-2009 11:13 AM
Message Edited by KevAC on 02-03-2009 11:16 AM
