Credit Usage Score effect

[shorttough]

i was thinking a max out CC would drop you 20-45 points.

so if i brought anything above 5K to 88% UTIL and the rest at 30%, then at least my recovery on at least 50% lost due to maxed out would give me a jump to 700 from 650. I suppose i'll find out on May.

[Anonymous]

Mortgage rates should stay low long enough for you to do the math and figure it out.

You have plenty enough help her

Good luck

[SouthJamaica]

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@shorttough wrote:

Hi all,

in terms of Credit Usage, i'm trying to boost my FICO score for Mortgage.

I have 12 maxed out credit cards. 2 closed cards with balances. 3 car loans. 2 mortgages

what would be the best scenario ?

I can either pay off 7 cards and leave 5 cards maxed out. 

i can have 2 paid off, 5 cards less than 30% and have 5 cards below 90%

I'm also looking at the factors below and trying to determine which one i should prioritize.

individual Credit Card usage

Overall Credit Card usage

Maxed Out Cards

Number of cards with balances.

Thanks.

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Pay all cards down to 79%

Then all cards to 49%

Then all cards to 29%

Then start zeroing some out.

[SouthJamaica]

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@shorttough wrote:

I know what i'm doing. I didn't post my Q's for you to advise me on Debt Management. READ the question before you say something!!

i've enough equity in the house to pay off all my debt and still have the same payment. Unfortunately to get there, i need a good interest rate and a good FICO Score and DTI less than 45%.

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Then that's what you should do; pay all credit cards except one down to zero, and your scores will be pretty much optimized.

Then you can do the refi.

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[Anonymous]

If you think i was advising you on debt management... your correct.... it comes from experience not negativity, and if you feel what i said was bad or unfeeling or pizzed you off... oh well because borrowing more to pay off debt is never ever the solution...

Stop buying, pay off your debt and cut up the devils that got you in this position... the enroll in some classes and learn how to manage you credit, because maxing out everyone of your credit cards is extremely poor credit management.

If im Pizzing you off once again, just imaging how your going to feel as your banker tell you the same thing, as your face turns red in embarrassment you will remember. .. oh yeah i heard this somewhere before.

Just do the right before your in chapter 7

[Thomas_Thumb]

If you are on fire, stop - drop - and roll.

[Anonymous]

Lol exactly

[NRB525]

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@shorttough wrote:

Hi,

HSBC	2354	2405	97.88%	55	15.49%
Citi Platinum	3,997	4000	99.93%	96	18.24%
Barclays	2449	2500	97.96%	66	19.99%
Barclays	4,429	4500	98.42%	118	19.99%
CapOne	1983	2000	99.15%	49	17.90%
Chase Slate	5904	6000	98.40%	147	17.99%
Amex	3462	3500	98.91%	92	18.24%
BOA	15,481	15500	99.88%	354	15.99%
Citi Simplicity	7,990	8000	99.88%	186	16.99%
Discover	5,289	5400	97.94%	108	16.24%
Amex Closed	4,273	9600	44.51%	90	14.24%
Discover	12,440	12450	99.92%	249	15.99%
BOA	2,992	3000	99.73%	78	20.24%
Citi Closed Acct	2,937	7800	37.65%	61	14.99%

I took a personal loan for 20K plus 5K reserve.  I have till May 2nd to get it above 700+.  My purpose here is short term solution. Please don't tell me about the snowball or high interest rate pay first Solution. Im not seeking long terms solution

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Thanks for listing the details. It is a good sign in the sense that you have a clear understanding of what you owe.

Now, I could suggest a series of BT moves (clear Discover, move balances from Citi and part BofA to Discover, move remainder of BofA to Citi, move others to BofA ) to reduce the monthly interest cost, currently well over $1,000 per month you are paying in interest alone, but that doesn't sound like what you want to hear. So I won't suggest all that

However, if your goal is to improve your mortgage score, I think you need to get an actual listing of what your mortgage scores are now. The scores you are listing, FICO 8, and the goal of FICO 8 at 700, is not really what you are trying to improve. You want to improve mortgage scores. That's a different animal, different criteria and the current state of that Mortgage score is the next bit of reality check you want to try for.

Good luck!

[Appleman]

I would disagree that borrowing more to pay off debt is something to never ever do. And again, I do not believe any of us are financial advisors but instead offer our free opinion.

Does borrowing have the potential to create an even bigger finacial mess? Sure, it could.

However, if you can get a personal loan that far undercuts your current credit card interest it should be considered. IMO one needs to get on a budget so that no additional credit card debt is created. Paying off credit cards and getting the revolving debt down will increase credit scores. Pay as much on you can on the new personal loan (with the lower interest rate) and you will be much further ahead.

To me the take home issue is that you cannot borrow yourself out of debt but you can make the debt more manageable by cutting monthly interest rate by 10% (my made up number). If I have $20,000 in CC debt at 21% interest I will pay around $2,350 a years in interest. Get that to 11% and I am paying $1,211 for the year. Saving $1,139 in one year. 

YMMV

[NRB525]

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@Appleman wrote:

To me the take home issue is that you cannot borrow yourself out of debt but you can make the debt more manageable by cutting monthly interest rate by 10% (my made up number). If I have $20,000 in CC debt at 21% interest I will pay around $2,350 a years in interest. Get that to 11% and I am paying $1,211 for the year. Saving $1,139 in one year. 

YMMV

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Not quite the correct mathyness:

$20k of balances at 21% is $4,200, just in round numbers, of annual interest. Your premise is correct, reducing the APR will reduce interest expense (cash out the door), so the direction is worth pursuing.