Pay Off Balance?

[Anonymous]

Hello!

I am trying to get out of debt.  I owe approximately $14,000 to Discover Card and about $80 on my Wells Fargo card. 

I have enough money to pay off the approximate $80 to Wells Fargo, but I have read stories here and there on the Internet of FICO scores dropping when someone pays off a credit card that has carried a balance for a long time.

My current credit utilization is about 64%.  I want to apply for 1-2 new credit cards so that I can transfer my balance to a low APR  and pay off my debt quicker.

Should I go ahead and pay off the Wells Fargo card or take some other course of action?

Thank you.

[Anonymous]

Paying off the 80 buck WF balance will have zero adverse impact to your profile/scores.  The only time people see a score drop from paying off an account is when they have no other current revolving balances and you said you've got a hefty one present on your Discover card.  One less account with a balance is a good thing and can only help your score.  You could see a few points in terms of score improvement, or if you have a bunch of revolvers may see no score increase.  You definitely won't see a score decrease, though, that I can assure you.

[sarge12]

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@Anonymous wrote:

Paying off the 80 buck WF balance will have zero adverse impact to your profile/scores.  The only time people see a score drop from paying off an account is when they have no other current revolving balances and you said you've got a hefty one present on your Discover card.  One less account with a balance is a good thing and can only help your score.  You could see a few points in terms of score improvement, or if you have a bunch of revolvers may see no score increase.  You definitely won't see a score decrease, though, that I can assure you.

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I agee...provided you are talking about fico scores....No telling what that Vantage score might do!!!! Just Sayin...

[Anonymous]

Just bear in mind that all the other fellas on the thread are only talking about is the scoring impact of the $80 payoff.  They are not commenting on your large scale goal, which is the hope that a CC issuer will approve you for a lot more credit when you are 14k in CC debt and have not much more than the $80 needed to pay off one card.

That might well work out, but they might also view you as a substantial risk and be unwilling to do so.

Naturally though it will be awesome if it does work out.  Good luck!

[Anonymous]

Good point from CGID in the previous post.

OP, you only mention 2 revolvers in your original question.  How many do you have total?  If you're at 64% utilization with ~$14k in CC debt, it suggests your total limits are in the $22k-$23k range... but I'm not sure if those are the combined limits between your Discover and WF accounts or if there are other revolvers adding to that $22k-$23k in limits?

Applying for additional credit when you're at 64% aggregate utilization probably isn't a smart move.  Based on that level of overall utilization, you may see approvals, but they may be for small amounts.  If you get approved for $3k (for example) that won't be much help as a BT go to for a $14k balance.  I would suggest taking your overall utilization at least down to the mid 40's utilization percentage wise before considering apping, but below 28.9% would be far better.  I can understand that given that size of revolving debt it may be extremely difficult to accomplish that, but going for that mid-40's goal first should definitely be a strong consideration IMO.

[Anonymous]

Thank you everyone for the replies.

Yes, I only have the two.  And, yes, the credit limit for the two combined is $22,000.  Over the last year or so I have paid off about 25% of my credit card debt.  I am making progress and it feels good, but I know I am still looking at close to two years to be CC debt free.

I am getting hit with 28.99% APR from Discover.  I have called two times to see if they can lower the APR but was told "no" both times.  I am able to knock down the balance about $400 a month.  So if I am approved for a card with even a small limit, a 0% APR for 12-15 months would really help. 

I was considering either the BankAmericard and/or the Chase Slate card for a balance transfer. 

Thoughts?

[Anonymous]

My FICO Bankcard Score 2 is 757 and my FICO Score 8 is 709.

I have about $12,000 is student loan debt that I am paying also.

[Anonymous]

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@Anonymous

I am getting hit with 28.99% APR from Discover.  I have called two times to see if they can lower the APR but was told "no" both times.  I am able to knock down the balance about $400 a month.  So if I am approved for a card with even a small limit, a 0% APR for 12-15 months would really help. 

 

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IMO this depends on if your goal is short term or long term.  If you get approved for a $3 limit on a Chase Slate, moving $3k from your Discover over to the Slate would save you around $1k over the course of the next year.  If you're able to get approved for a $6k limit on the Slate, however, that would mean a $2k savings on interest.  If it would only take you 6 months to get your profile into a place to possibly achieve that $6k limit over a $3k limit, you'd be paying $500 more in interest based on those 6 months, but then saving $2k, meaning a net interest savings of $500 over just applying today and getting a $3k SL.  For me, the decision would really come down to whether or not you think it's realistic to be able to get your utilization down to < 48.9% in the next 6 months or so. 

[Anonymous]

Thank you.

I do think it is realistic to get my utilization down to 49% in 6 months. 

Do you think it would be a good idea to apply for the Chase Slate or the BankAmericard even if I would get approved for only a small credit limit, and then a 2-3 months later apply for the other one?  Getting approved for one of the cards would lower my utilization % and at the same time allow me to make bigger payments on the balance itself instead of paying more for interest. 

I know the hard pull would lower my FICO scores, but I believe my current scores are about to go up.  I applied my tax rebate to my balance, and I do not think that payment is reflected in my scores yet.

[sarge12]

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@Anonymous wrote:

Hello!

I am trying to get out of debt.  I owe approximately $14,000 to Discover Card and about $80 on my Wells Fargo card. 

I have enough money to pay off the approximate $80 to Wells Fargo, but I have read stories here and there on the Internet of FICO scores dropping when someone pays off a credit card that has carried a balance for a long time.

My current credit utilization is about 64%.  I want to apply for 1-2 new credit cards so that I can transfer my balance to a low APR  and pay off my debt quicker.

Should I go ahead and pay off the Wells Fargo card or take some other course of action?

Thank you.

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Have you considered getting an inastallment loan from lending tree, prosper or even a bank to pay off the credit cards? Then in the future always use credit cards the only way they should be used PIF every month.