My situation. Opinions needed.

[Anonymous]

Hello,

I would like to let you know my current situation. At the moment, my current debts are as follows (debt/limit):

- AMEX  =            $5,165/$5,500

- Chase Master =  $6,045/$10,700

- Citi Master =       $1,500/19,500

- Besbuy =            $  800/$2700

- CircuitCty  =        $1100/$2000

Total =                 $13,110/$40,400

All of my debt are intentional, since i have a lock-in 0% rate for both best buy and circuit city, AMEX has about 5%, and Master has roughly 6% rate. As it sits right now, I am at 33% of debt to available credit ratio.

I am reluctant to pay off best buy and circuit city sooner, since i have 0% rate, however, I need to bring my FICO score up to at least 710, I am at 690 right now. I have the money to pay off AMEX for it's total amount, and Master will be paid off in July, guaranteed.

Since I need to increase my score 20 points, how do you guys think I should do it? Will paying off AMEX increase my point by 20? If yes, how soon will it increase? I am thinking about refinancing my home soon, so the sooner my point increase the better. 

Thanks in advance. This is a great forum.

Message Edited by tmdz28 on 04-24-2009 10:06 AM

[Anonymous]

What are your limits on those cards? Please list them as bal/limit

[RobertEG]

Based upon what you have provided, FICO advice cannot be very specific.

You are in the proverbial tug between what is best to do financially, and what is best to do from an immediate FICO scoring perspective.

Not paying on the lower interest rate accounts may be the financially wise thing to do over any period of time, but FICO dont know and dont care about account interest rates.

If you are more interested in immedate FICO score boosts, then here is my advice.

FICO scoring looks about equally at %overall revolv. util and the % util on individual cards,and monthly balances.

So strictly from a FICO perspective, you dont want any cards showing very high % util (preferably all below 40% or so), and at least half of  your cards reporting a zero balance.  Pay down the higher %util cards first, regardless of interest rates on those cards.  Dont ignore the small balance cards, if you can pay them to zero balance, and thus show at least half of your revolv. accts with zero balance. 

None of this may make economic sense, but only very short term FICO gain sense.

[tiger67]

Also consider the cost of leaving the balances on the interest accruing accounts vs the 0% accounts. If you paid the CC and BB balances (total $1900) and left that amount on the the MC at 6%, you would only pay appr. $118 in interest over 12 months. This is small potatoes if you need the quick FICO bump.

I would suggest the following:

Pay CC and BB to $0 then apply the remaining $3265 to the other two cards based on their individual utility rates. Make sure nothing is maxed out (>79%). Fico looks at both individual and overall utility. Paying your debts down $5165 will reduce your overall utilty to appr 20.2%.  Try adding a little more and get to 19%, many people report a small bump at that threshold.

[Anonymous]

Thanks guys. Based on the suggestions, i noticed that my AMEX is hurting me bad, since it is over 80% (they decreased my credit line)