Pay Off Balance?

[SouthJamaica]

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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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With credit cards, as long as you have one card reporting a balance you won't get penalized for zero balances. Yes you should pay off Wells Fargo.

Of course the real trick is paying down the Discover card, preferably to 28% of its limit.

As to other courses of action to take, we would need to know a lot more about your situation to advise on that. (E.g. number of revolving & open installment accounts, balances, limits or original loan amounts, FICO scores).

[SouthJamaica]

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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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Having now read your followup posts, I can give you some advice.

My advice would be not to apply for the Slate card, because if you get it you will get too low a credit limit to do you any good.

My advice would be to join a credit union which has no-balance-transfer-fee platilnum cards. Then apply for a no-rewards platinum card or a personal loan. Then pay off the Discover balance with one of those.

Examples: PenFed, NFCU, Langley FCU, Vantage West, Alliant CU.

[Anonymous]

I have considered a personal loan to pay off Discover.  I know it would also add more diversity to my credit report.

But would it be even harder for me to get an unsecured personal loan?

Perhaps, get a new card with a small credit limit, then later get another one with another small credit limit, and then later round it all off with a personal loan? 

I know it sounds like I am dead set on getting a new card(s), and I do eventually want to get a new card but not to "free spend".  I am serious about paying off my debts.  I am open to what the group considers to be the best course of action.  Thank you, everyone, for your help.

Believe me, I have NO intention of ever carrying a balance again.  I cannot wait to be debt free, and I NEVER want to go into debt again.

[Anonymous]

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@Anonymous wrote:

Believe me, I have NO intention of ever carrying a balance again.  I cannot wait to be debt free, and I NEVER want to go into debt again.

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I am very encouraged to hear this last sentence from your post.  Good for you!  Most important decision you could have made here.

My own advice is this.

(1)  Pay off the $80 card.  (Unanimous consensus here.)

(2)  Without trying to open more cards or get loans, just plug away at the Discover debt.  It will be painful and take a little time, but IMO that's the best thing to do.  Get that debt to about 47% -- with that percent being individual utilization, i.e. that card and its credit limit considered by itself.  In theory 48.9% would be enough, but each month you will have interest added back, and you want to get that card safely under 48.9% so that there is no way it can get reported as 48.99% or above.

(3)  At that point you will be in a far better position to apply for a 0% card (or a loan if that is better).  While you are applying for the loan or card, continue knocking away at that Discover card.

[sarge12]

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@Anonymous wrote:

I have considered a personal loan to pay off Discover.  I know it would also add more diversity to my credit report.

But would it be even harder for me to get an unsecured personal loan?

Perhaps, get a new card with a small credit limit, then later get another one with another small credit limit, and then later round it all off with a personal loan? 

I know it sounds like I am dead set on getting a new card(s), and I do eventually want to get a new card but not to "free spend".  I am serious about paying off my debts.  I am open to what the group considers to be the best course of action.  Thank you, everyone, for your help.

Believe me, I have NO intention of ever carrying a balance again.  I cannot wait to be debt free, and I NEVER want to go into debt again.

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You can do a preapproval on both Lending tree and Prosper with a soft pull. That will show you if you can get the loan and at what interest rate. Might be easier to pay that debt at 10% interest.

[Anonymous]

Ladies/Gentlemen,

Thank you for all your help.

CreditGuyInDixie, when you say to get the individual utilization, you mean that Discover Card alone is at 47% (not including my overall utilization), correct?

Sarge12, thanks for letting me know about Lending Tree and Prosper both doing soft pulls during preapproval.

Which would be better Lending Tree, Prosper, a local credit union, or Wells Fargo (my current bank for about 15 years)?

Thank you, everyone.

[Anonymous]

That's right.... individual utilization means each car considered by itself.

[sarge12]

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@Anonymous wrote:

Ladies/Gentlemen,

Thank you for all your help.

CreditGuyInDixie, when you say to get the individual utilization, you mean that Discover Card alone is at 47% (not including my overall utilization), correct?

Sarge12, thanks for letting me know about Lending Tree and Prosper both doing soft pulls during preapproval.

Which would be better Lending Tree, Prosper, a local credit union, or Wells Fargo (my current bank for about 15 years)?

Thank you, everyone.

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I have never used Lending tree, Lending Club, or Prosper...but I did recently do a soft pull when considering buying an RV, and was approved by both Lending Club and Prosper. I just decided against the purchase. IMO no lending institutions beat a credit union.

[Anonymous]

I just check preapprovals with both Lending Club and Prosper and was turned down by both.  I'll try again with the preapprovals in a month or two.

Thank you again, everyone!