How will this effect my credit score and ability to get new credit

[Anonymous]

Due to going to law school and it taking a year for me to find a job I'm currently being crushed by monthly debt payments that amount to almost an entire paycheck. I need some advice. My debt listed on my CR is as follows:

Federal Student Loans: ~250,000 at various interest rates. Paying $420 a month due to income based repayment plan

Car Loan: $3,000 @ 151/month. 21 months remaining @ 5% interest

Personal Loan: $8000 @ 278/mo, 34 months remaining @ 12% interest

Credit Card 1: $8000, $8500 CL, min payment $220/month, 23% interest

Credit Card 2: $1800, $2000 CL, min payment $50, 22% interest

Store Card: $1700, $4000 CL, min payment $25, 0% interest, will be paid off by the time the intro rate ends

Private Student Loans: $31,000, min payment $273, of which $97 is paid for by my mom

I'm also an authorized user on two of my mom's credit cards:

CC1: $9000 balance, $21,000 limit., $160/mo

CC@: $7500 balance, $19,000 limit, $160/mo

Here's the scenario that's about to happen:

My mom is refinancing her home. As a condition for the refinance she will be paying off both of her credit cards that I am an AU on. In addition, because she is a cosigner on both my car loan and personal loan they are requiring those to be paid off as well. ( I will give her the payment every month until they're paid off). This will cause a reduction on my credit report in my installment account balance of $11,000 and a reduction in my monthly payments of $429. In addtion the AU accounts will be reduced by $16,500 and the montly payment reduced by $320 a month. I know AU accounts aren't supposed to be factored in, but when I pull my CRs it looks like they are.

Ideally I'd like to get a new CC with an intro balance trasfer period to reduce the amount of itnerest accruing on the cards. How much will the paying off of my two installment acounts and the two AU credit cards help my credit score and ability to get a new CC?

[pizzadude]

FICO scoring actually does consider AU accounts just like they were your accounts.   So having one of the CC accounts paid will help, but if the account it closed then it won't help your utilization since you would lose the CL.   Paying the Auto loan won't really do anything to help or hurt your FICO score.

Honestly I think it is going to be difficult getting new credit extended to you because of the fact that you are maxed out on all your cards and also because of the magnitude of your outstanding debt. 

[kjm79]

You could consider putting your SL's in forebearance and use those payments to knock down some of the other debt.  The interest will still accrue and with the amounts of your SL's that's a lot of interest, even at the lower rate they're probably at! It may not be the best option but it is an option that could free up some cash.  Then when your law degree starts paying for itself throw money at the loans like crazy. 

I agree with Pizzadude's comments on the possibility of being extended MORE credit with your current cards so high.  But maybe with the loans in forebearance for a year or so and the free'd up cash from that and the accounts your mom is paying off, maybe you can get a debt consolidation loan for the rest at a more manageable rate and payment.  That is quite a chunk of change to manage every month. 

You can try calling your CC companys and see if they'd lower the interest rate.  Won't help much with the balances, but again, just another option. 

[sooner63]

I'd start by consolidating all of the student loans. I did this and it cut my monthly payment more than half. They used the average of all of my interest rates to determine my new rate. Granted, you owe much more than I did, you should still be able to take advantage of the income based repayment plan. This will help with your monthly expenses and help your DTI...a little anyway.

[webhopper]

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@Anonymous wrote:

Due to going to law school and it taking a year for me to find a job I'm currently being crushed by monthly debt payments that amount to almost an entire paycheck. I need some advice. My debt listed on my CR is as follows:

Federal Student Loans: ~250,000 at various interest rates. Paying $420 a month due to income based repayment plan

@Anonymous Loan: $3,000 @ 151/month. 21 months remaining @ 5% interest

@Anonymous Loan: $8000 @ 278/mo, 34 months remaining @ 12% interest

Credit Card 1: $8000, $8500 CL, min payment $220/month, 23% interest

Credit Card 2: $1800, $2000 CL, min payment $50, 22% interest

Store Card: $1700, $4000 CL, min payment $25, 0% interest, will be paid off by the time the intro rate ends

Private Student Loans: $31,000, min payment $273, of which $97 is paid for by my mom

I'm also an authorized user on two of my mom's credit cards:

CC1: $9000 balance, $21,000 limit., $160/mo

CC@: $7500 balance, $19,000 limit, $160/mo

Here's the scenario that's about to happen:

My mom is refinancing her home. As a condition for the refinance she will be paying off both of her credit cards that I am an AU on. In addition, because she is a cosigner on both my car loan and personal loan they are requiring those to be paid off as well. ( I will give her the payment every month until they're paid off). This will cause a reduction on my credit report in my installment account balance of $11,000 and a reduction in my monthly payments of $429. In addtion the AU accounts will be reduced by $16,500 and the montly payment reduced by $320 a month. I know AU accounts aren't supposed to be factored in, but when I pull my CRs it looks like they are.

Ideally I'd like to get a new CC with an intro balance trasfer period to reduce the amount of itnerest accruing on the cards. How much will the paying off of my two installment acounts and the two AU credit cards help my credit score and ability to get a new CC?

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If I were you I would be looking at a consolidation loan on those student loans, with a repayment period that doesn't stress you out too much... Hopefully law school will be over soon! My lawyer is paying 1k per month on his student loan bill... it aint pretty!

I would call up the credit card companies and negotate a lower APR, if you have to, mention the B word (BK).  They will be more likely to lower your interest that way.  I remember my parents doing this in the 80s during the oil bust... they were on the phone negotiating lower APRs and closing the ones that wouldn't cooperate.  I don't advise closing the account, but 23% is high!

[RobertEG]

In my opinion, reliance on the improved scoring on the AU accounts may be illusionary.

Sure, it will help your score, but that does not mean that a lendor wont discount that score bump.

Seeing high util on YOUR own accounts, I would speculate that an artificial score bump based on the credit history of another wont make a huge impression.

And a new CC, even if secured, might be a dangerous incentive to run up its balance.

Your main concern seems to be handling current debt.  Unless you NEED to apply for new credit, I would put FICO on the back burner and address debt.

The suggestions regarding the student loans looks promising.

[crunching_numbers]

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@Anonymous wrote:

Due to going to law school and it taking a year for me to find a job I'm currently being crushed by monthly debt payments that amount to almost an entire paycheck. I need some advice. My debt listed on my CR is as follows:

Federal Student Loans: ~250,000 at various interest rates. Paying $420 a month due to income based repayment plan

@Anonymous Loan: $3,000 @ 151/month. 21 months remaining @ 5% interest

@Anonymous Loan: $8000 @ 278/mo, 34 months remaining @ 12% interest

Credit Card 1: $8000, $8500 CL, min payment $220/month, 23% interest

Credit Card 2: $1800, $2000 CL, min payment $50, 22% interest

Store Card: $1700, $4000 CL, min payment $25, 0% interest, will be paid off by the time the intro rate ends

Private Student Loans: $31,000, min payment $273, of which $97 is paid for by my mom

I'm also an authorized user on two of my mom's credit cards:

CC1: $9000 balance, $21,000 limit., $160/mo

CC@: $7500 balance, $19,000 limit, $160/mo

Here's the scenario that's about to happen:

My mom is refinancing her home. As a condition for the refinance she will be paying off both of her credit cards that I am an AU on. In addition, because she is a cosigner on both my car loan and personal loan they are requiring those to be paid off as well. ( I will give her the payment every month until they're paid off). This will cause a reduction on my credit report in my installment account balance of $11,000 and a reduction in my monthly payments of $429. In addtion the AU accounts will be reduced by $16,500 and the montly payment reduced by $320 a month. I know AU accounts aren't supposed to be factored in, but when I pull my CRs it looks like they are.

Ideally I'd like to get a new CC with an intro balance trasfer period to reduce the amount of itnerest accruing on the cards. How much will the paying off of my two installment acounts and the two AU credit cards help my credit score and ability to get a new CC?

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What is your current income? How much per month goes towards those 3 CC's? I think your DTI ratio is going to be your problem, and you will need to strategize around it. Your mom paying off the personal loan and car loan will help because it takes the debt "off the books" per se.  The $97 paid by your mom to your private SL will not help because the loan is yours, and creditors will not see the money is coming from elsewhere.  If we take an initial goal of trying to qualify to get a 0% BT CC, this is how I would approach it:

1) consolidate your student loans. ASAP. No reason to pay a gazillion different loans, and it should reduce the overall amount you pay.

2) see if your mom will let you pay her over an extended period of time on the stuff she is paying off ($278 + $151= $429, maybe she will take $250 a month for the first year while you attack the rest of your debt?)

3) Make minimum payment to the $8500 CL and throw everything you can at the $2000 CL. Get that balance to $1000. (50% util). Then switch your attack plan, and pay minimum to that card, and throw everything at the $8500 card. get that balance below the maxed out mark, like under $6800 (80%).  Hopefully your store card is close to paid off, or paid off at this point. Pull your scores and see where you are at. You might be able to get a 0% card then to transfer some of your balance.

Obviously, YMMV, but I think that might be a workable strategy. No "maxed" cards, moderate util with help from the AU stuff,  and at least one card at 0. Without knowing the rest of the stuff in your history or the income, that is the best I can figure.