New to Board, need Help.

[lanah]

I'm 23 and my scores are horrible mainely because of Utilization. I have four cards that are maxed out.  The balances are 1800, 900, 800 and 300. I figured out that I have about 600 dollars a month to take down these cards. SHould i do what orman says and pay the highest interest one off first and pay minimum on the rest? I've been told that this will save me money but won't lower my score until most of them are paid off. I've been told that it's better to try to pay all of them down to 60% Utilization and then try to get them ALL down to 30% and then 10% and tht the consistant lower balances on ALL of my cards will help my score better. My current scores are 603 experian, 611 Eq, 578 Transunion. My goal is to first get them all to 620 then to 660 as quick as possible, hopefully in a year.

The other problem I have is that I'm an AU on two of my mom's cards. This helps sometimes but at times that she takes vacations it hurts. The limits on those are 5000 and 17000. She maxes them out sometimes but pays them off within a month or two.  Right now they are helping but I know the summer is coming and I fear they will hurt. Should i get her to take my name off those cards? If so will they come off of My credit report without me doing anything or will I have to send in a dispute.

other things that are on my report is an College loan with a balance of 22700, no late  payments at all for 3 years. A car loan that is now paid off but had late payments almost two years ago. and A personal loan for 5000 that i was never late on.

Sorry for the long email and thanks in advance for your help.

5/16/08 603 Ex, 611 EQ, 578 TR,  Goal All 620 in 3 months,, 660 in a year.

Message Edited by lanah on 05-16-2008 08:40 AM

[Anonymous]

Your scores aren't that bad.  Pay the highest Interest card first and minimums on the rest and go down the line till they are all paid off.  You say you have $600 per month you can put towards these cards....this means you should have them paid off in 7 months.....Saving money on interest is more important right now! And in 7 months when they are all paid off your scores will be well over the 660 you want.

I was once in your boat, but my credit card debt was on 8 cards all maxed out and $12,000.  I paid the Highest Interest first and went down the line.....my scores are all now over 750 and I carry no credit card debt (only a car installment loan)

[smallfry]

Get yourself off of your mother's card(s). Pay all down under 10% as soon as possible. You don't need an iffy AU line.

[Junejer]

I agree with both mel and smallfry. If you are not needing to app for anything, take care of the highest interest rates first and then apply those dollars to the next and lather, rinse, repeat.

Your scores are going to go on a huge "Six-Flags" type of roller coaster ride when your mom goes on vacation. You can simply call up the CCC and ask to be taken off. Done deal. Now that you have your own cards, you don't need the frustration of those limits possibly getting maxed.

BTW, the uti breaks are at <50%, <30% and <10%. I hear probably <20% too, but I haven't tried that one myself.

GL.

[lanah]

Actually raising my credit score is even more important to me than saving money on interest because I want to buy a house is 6 months or so and don't want to get the high interest rate.

So with that said would it still be better to pay off the highest interest rate first? For example the lowest interest rate is the 300 dollar balance but I can pay that in full this month and put 300 on another one. Does having one of your cards with 0 balance score better than paying six hundred off of the 1700 hundred balance card that has the higest interest rate?

[RobertEG]

Lanah, if, and ONLY if, FICO is your primary concern, then putting the money into the lower balance cards MIGHT (I say might)  be the better FICO plan, though definately not the best financial plan, for reasons of which you are well aware.

Obviously, wherever you put the money, overall %util will be the same.  But by putting it into the lower balance cards, you will decrease their indiv %util more than the higher balance cards, which will be a small benefit.  However, remember that not paying more than the min on the higher balance cards will incur more interest on those cards, which will translate into a higher balance next month, aggravating the %util on those cards, and thus on your overall %util. 

IMHO, this is not a good time to be applying for new credit... not until  you get your util down on existing debt.  Implied in your post is that you can spare $600 a month to pay down existing debt.  If you take on new credit, then you will further increase  your debt and also reduce your ability to reduce it.  Jacking up FICO by a tweak now in order to put yourself into a worse FICO position a few months from now would be a plan of which I would make serious reevaluation.

[marty56]

In 6 months you could pay 3600 off your 3800 CC debt.  This would put you into a could position util wise.  I would also pay the smaller balance cards off first.  The reason is hat you get dinged for the number of CCs that report a ablance and in my profile, 1 is the best.

As far as the AU goes, I would assume the worse in the the mortgage company would pull your scores when your mom maxs out her CCs so I would be removed from them.  There is a possiblity that the AU is also helping you by increasing your overall account age but you would have to calculate that yourself.  Iy would be nice if your mom could refrain from using those cards and also pay them down. 

Not to beat a dead horse here but this one reason why I dont like the AU concept.

You need to get 2 of your score at 620 or higher since the mortgage rate table here says there is a big difference in the rates you get at 620 verses 600 or even 619.

I also agree not to apply for any new credit and it goes without saying that a late payment now would effectivly kill your chances at a 620 and possibly the mortgage at all.

[lanah]

Thanks a lot for your help guys.

I think I'm going to pay the lower balances off first, that way in two months I'll have two of my cards down to 0 balance. if i pay down the 1700 balance card then two months from now I will still have four cards with balances.  I'm taking my name off of my mothers cards , so my score could go down a point or two because of length of credit history. But i think that's worth it.

I am Definitely not getting any more credit until I apply for my mortgage and I want the 660 and above mortgage rate that's listed on this site.  as a matter of fact I am not getting any more credit cards period.

So you really think a 660 is possible in 6 months?? If so, what if I payed 3600 hundred NOW,, would my score go up to 660 in two months? That would hurt me financially but i proboably could do it.

If I could get it up immediately I would pay down my college loan the remaining four months and possible get my score even higher. I don't know maybe i'm being too optimistic.

[Anonymous]

Leave your student loan alone, paying it off completely could actually hurt your score if it's your only installment loan. Student Loans don't seem to have much FICO effect as long as you aren't late with them.

[lanah]

I couldbn't pay it off if I wanted too, it's $22700,,lol. But what I was thinking was that I could pay it down some if I pay 3600 hundred on the credit cards now.. Paying it down a little could help  my DTI before I apply for the mortgage