Pay off dilemma, please help!

[Anonymous]

I want to buy a house, so I would like to bring my scores up by summer. 

I have a 728 EQ currently., and a 717 FAKO Transrisk

I have a total of 8 cards totalling about 100k in total credit limits.

6 have zero balances, but:

An amex has 6k on an 8k limit (75%)

A visa has 21k on a 2k limit (84%)

My total utilization is 27%

I have about  6k to pay down cards. Should I use the 6k to pay off the Amex to 0%, or pay down the Visa to 15k (60%)

Either way, my total utilization will be about 21% when I am done.  

Thanks!

Message Edited by PeterKeilman on 02-12-2009 09:48 PM

[Anonymous]

Being over 50% on just one card will depress your score somewhat. If you can score low interest balance transfers from some of your other cards you might be able to squeeze some points out by spreading that debt over more cards, paying attention to keeping utilization % on each card low. Paying the AMEX to 0% won't count for much if you are still at a high % of your VISA. Paying the Visa down to 60% won't help much as it will still be over 50%.

You're already at the GOOD credit tier and to get to 760 or better, to get the next best rates, you will just have to pay down your debt to as close to 0% as possible.

[marty56]

Going from 27% to 20% util probably wont get you the points to make 760 but the less debt you have, the better your DTI ration will be on MR.

[Anonymous]

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@marty56 wrote:
Going from 27% to 20% util probably wont get you the points to make 760 but the less debt you have, the better your DTI ration will be on MR.

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Thanks, marty!

One other factor I should mention:  My wife is a joint owner (not AU) on the Visa.  Right now, the Visa is hurting both of our scores because of high utilization.  I need to get BOTH of our scores up for the mortgage app. 

My wife is not on the AMEX. So the high utilization on that card only hurts me.

Also, the Visa has a great low fixed BT rate of 3%.   The AMEX has a fixed BT rate of 4%.  I don't want to pay down either one, but I will to raise my score. 

So which one should I pay down?  The Visa to get it down to 60%, or the amex to pay it off? 

[Anonymous]

Peter -

Have you considered requesting a limit increase to drop your utilization on one of the cards? The online credit limit request form for my Amex (handled through BofA) explicitly says that they usually won't do a hard pull on your credit, and if they do, they'll return to ask permission first. I'm strongly considering that as a way to get below 50% utilization on that card.

On this topic - does anyone know the relative balance of total utilization and individual credit card utilization? I'm guessing total utilization is worth more . . .

[Anonymous]

JESMONT wrote:

Peter -

Have you considered requesting a limit increase to drop your utilization on one of the cards? The online credit limit request form for my Amex (handled through BofA) explicitly says that they usually won't do a hard pull on your credit, and if they do, they'll return to ask permission first. I'm strongly considering that as a way to get below 50% utilization on that card.

On this topic - does anyone know the relative balance of total utilization and individual credit card utilization? I'm guessing total utilization is worth more . . .

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Yes, I did consider utilization.  The Amex did a CLD from 18k to 8k recently, and have refused to do a CLI.

The visa is with chase.  They would do a hard inquiry.  And I doubt chase will raise much above 25k.

So, not much chance of doing CLIs on these cards right now.  I am doing them on other cards.

There was a discussion on this board that total utl and individual utl are treated 50/50.  I don't know exactly what that means, which led me to ask this paydown question.  Really, it is a question of which individual utilization change would help me the most. 

[haulingthescoreup]

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PeterKeilman wrote:

I want to buy a house, so I would like to bring my scores up by summer. 

I have a 728 EQ currently., and a 717 FAKO Transrisk

I have a total of 8 cards totalling about 100k in total credit limits.

6 have zero balances, but:

An amex has 6k on an 8k limit (75%)

A visa has 21k on a 2k limit (84%)

My total utilization is 27%

I have about  6k to pay down cards. Should I use the 6k to pay off the Amex to 0%, or pay down the Visa to 15k (60%)

Either way, my total utilization will be about 21% when I am done.  

Thanks!

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*squints at the 21k on 2k thing*

Is that a $21K balance on a $25K CL?

Since AmEx has already started chasing your balance, and since your wife is joint on the Chase, I'd probably throw all the money at it. Otherwise I would have said to pay the AmEx to $3900 (<49%) and the rest to Chase.

You both need to know all three FICO scores, and tonight is your last chance for finding out your FICO EX. As you know, mortgage lenders pull all three scores from both applicants, and they generally go with the lower middle score. So if one of you is 760-740-720, and the other is 770-710-700, they're going to go with the 710.

And as I'm sure you know, keep shaking the money tree to get the Chase down as far as you possibly can.

I'd say that by now, just about every lender is familiar with AmEx CLD's, so they shouldn't give you the Stare when you explain where your CL went.

As far as scoring, what many of us have found is that we can get away with high util on one card, but we get nailed for two or more. But since AmEx will probably keep dropping your CL as you pay, I'd just go with the Chase.

[Anonymous]

What're these AMEX credit limit decreases? I haven't had one yet - there something I should know about?

[haulingthescoreup]

lol, do a search here. You'll have plenty of hits with which to keep yourself amused.

Essentially, American Express/ Centurion Bank is in a world of hurt, and they have to reduce the amount of extended credit on their books. They seem to be going after those with super-high CL's and after those who are carrying balances --the higher the balance, the more vulnerable. This is also why they're pre-approving Plats and Golds for everyone and their pet cats --it's instant cash for them.

Many haven't been hit; many have. Your chances for dodging the bullet are better if you PIF monthly and have squeaky clean credit. High util on a different card might trigger this, whether it's 0% or not.

You might well be fine. Just don't get terribly attached to your card or to its current CL. These are strange times we're living in.

[Anonymous]

Thinking about it, my only true Amex is a card I don't use much and usually is PIF. What I think of as my AMEX is a Bank of America Amex. That might be why.