FICO due to no mortgage and credit card only debt

[FICOdawg]

So despite having no mortgage, and my only debt is a car loan and 41k in credit card debt across two cards (thank you divorce lawyer).   My credit score is at 698       I'm victim of the credit mix and credit utlization.       I have a substantial 401k balance.   I own a 500k+ condo with no mortgage.     I make nearly 200k.    Other than the obvious of paying off the CCs, any other angle to get my credit score up?     I have perfect payment history but more scores dropped once lost the mortgage and solar loans.        I'm obviously not going to go get a mortgage to pay off the cards and pay all the fees.   Been hitting the cards at 2500/month to kill them off but at least for the next 6-9 months my credit utilization will be above 30%.       Any tips?       Would getting another CC help me or would that penalize me?

[GZG]

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@FICOdawg wrote:

So despite having no mortgage, and my only debt is a car loan and 41k in credit card debt across two cards (thank you divorce lawyer).   My credit score is at 698       I'm victim of the credit mix and credit utlization.       I have a substantial 401k balance.   I own a 500k+ condo with no mortgage.     I make nearly 200k.    Other than the obvious of paying off the CCs, any other angle to get my credit score up?     I have perfect payment history but more scores dropped once lost the mortgage and solar loans.        I'm obviously not going to go get a mortgage to pay off the cards and pay all the fees.   Been hitting the cards at 2500/month to kill them off but at least for the next 6-9 months my credit utilization will be above 30%.       Any tips?       Would getting another CC help me or would that penalize me?

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be very, very grateful you have no lates because your score will go up signifigcantly when you pay off the credit cards. the low score is just temporary. 

don't get another cc until you pay off or down your cards signfigiantly 

are the credit cards at 0% apr? other 41k at 20% apr will eat you alive ~$700 a month in interest?

otherwise pull from the 401k or take out a HELOC and pay them off now, IMO 

200k/year and no rent? feels like you can do better than only $5k/month on the cards

[FICOdawg]

I am currently maxing out my 401k and use a back door Roth so that comes off the top each year.     I have 2 credit cards I've had for long time but inherited the balances from the divorce.      Building up emergency cash fund for few more months then will hit cards with more.   Divorce was two months ago so took a hit in bank account.    Crazy that with my salary, paid off house, long credit history, that 41k in credit cards would kill my score so much.    

Yes my cards are 18.49% and plan to apply for a balance transfer card once I get it down to under 25k in CC debt.     Just having to grind through for another 4-5 months.     

How long do we get dinged on credit scrore after a hard inquiry?    I know during the move there were inquiries as I moved States so insurance company, utliity companies and ATT all pulled my credit.

[Patient957]

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@FICOdawg wrote:

 Crazy that with my salary, paid off house, long credit history, that 41k in credit cards would kill my score so much.    

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Salary and paid off house do not factor into credit score. 

It's your utilization that's killing you, and it probably would be even worse if not for your long credit history.

[FICOdawg]

I get it.     FICO scoring methods are truly stupid but obviously have huge impact so I need to be in the upper 700s again.  A paid off home SHOULD be part of credit scoring as should a 401k balance but that argument won't solve my current problem having a 695 credit score.  Never had this problem until paid off house and other long term loans like the solar loan.   Very frustrating.    When I bought my condo they actually ran credit check.      

[FicoMike0]

Ditto @GZG 

Utilization is killing you. 

The good news is utilization has no memory, once it's under control , your scores will rise.

[Thomas_Thumb]

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@FICOdawg wrote:

I am currently maxing out my 401k and use a back door Roth so that comes off the top each year.     I have 2 credit cards I've had for long time but inherited the balances from the divorce.      Building up emergency cash fund for few more months then will hit cards with more.   Divorce was two months ago so took a hit in bank account.    Crazy that with my salary, paid off house, long credit history, that 41k in credit cards would kill my score so much.    

Yes my cards are 18.49% and plan to apply for a balance transfer card once I get it down to under 25k in CC debt.     Just having to grind through for another 4-5 months.     

How long do we get dinged on credit scrore after a hard inquiry?    I know during the move there were inquiries as I moved States so insurance company, utliity companies and ATT all pulled my credit.

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It looks like you don't need new credit. Just pay down the CCs over the next several months as funds allow. Since you have a clean file and an open loan, score should get to 720 once CCs report under 29% utilization and  760 when UT drops below 9%. No need for a new card. Build up some cash reserves and get rid of high interest CC debt. A 3rd card won't help your score at this time.

I would suggest suspending Roth contributions to pay down the CCs more quickly and build-up some liquid after tax savings. I assume you may need to wait until the following benefits cycle to re-start the Roth.

[FICOdawg]

That's the plan to pay down CC semi agressively as I build  safety cushion first.     From all the moving expenses, furniture (I have to start completely over) and relocating I burned through my cash after divorce.    Was shocked when I saw I had a credit score under 700.     

Was thinking another CC would help on utlization but I'm in the quandry of now having a sub 700 score.    Once I pay down the card with the lowest balance of $16k, was going to apply for a $0 balance transfer card while I pay off the second card.      I'd like to get my score over 800.

[Thomas_Thumb]

That's a reasonable approach. However, I wouldn't apply for a new card until your score reaches 720. Otherwise your approval odds, ability to get a high SL and 0% apr or $0 transfer promo will be limited.

Be aware- a new revolving account typically drops score 15-25 points if your current youngest revolver is over 12 months old. That new credit penalty lasts for 12 months!! Thus, the recommendation not to get a new card at this time.

[FICOdawg]

Yeah divorce bit me there too.  Bought a new (used) car so we had clean ownership of cars so getting dinged on credit for that new loan as well.   Credit scoring is truly stupid.      Just started using the Experian app.  Should my score keep improving every month with the lower balance or only when I hit certain percentages?   I also had a PayPal credit card amount that I paid off and score bounced up but I basically took a $4k balance to zero in one go.