Ready for a Comeback!

[Anonymous]

Hello:

I won't bore everyone with all of the details, but my credit went from ~ 725 to 591 in about 12 months.

Massive utilization (51%), 5 OLSA (student loan) accts that went to 90 days late (disastrous circumstances) and 2 CC's that went over the limit on 3 billing cycles (that's 3, total, between the two cards). Awful. Embarassing.

Now, I want to consoldiate about $13K in CC debt into a new mortage, but I need my 591 to go to a 620.  Here are the CC situations:

CITI: LIMIT $6100 BALANCE $6200

AMEX 1: LIMIT $1000 BALANCE $463

AMEX 2: LIMIT $3000 BALANCE $2850

VISA 1: LIMIT $2000 BALANCE $1625

VISA 2: LIMIT $16,000 BALANCE $2875

RESERVE LOC: LIMIT $1000 BALANCE $650

I don't expect a magic bullet here, just asking: if you had $2,000 to apply to the above, right now, what would be the best methodology? 

My thought is to put $300 towards the CITI to get it off the (absurd) 100% utilization. Then, I'm not an expert, but am I best off knocking the utilization % way down on the smaller limit cards (pay down the AMEX 1 under 10% (or "x" %?), as well as the reserve line) and then spread the remaining $1000 across the remaining? 

Short of those tragic (5) 90 days delinq's (of COURSE they ((the separate loans)) all report separately, even though it's a single monthly payment). Otherwise my payment history is near perfect (99+%- which we know in the "credit game" is a step away from poor) and the (3) over the limit dings I can't do anything about (calling to have removed an option?).

I'm disgusted with myself, the utlization was hard to avoid but the aforementioned was sheer laziness/absentmindedness. 

It's still hard for me to believe that the above- over 19 years- or 7 years - or 2 years - or 12 months puts me in such an awful credit position, but it does. But complaining about the privatized, profit-driven world of credit scoring is for another time.

Thank you so much in advance for the help.

Best,

J

[Anonymous]

88.9% is considered maxed out by lenders. Pay Citi down to $5300 or less. That brings it to 87%, which should keep it from spiking back over 88.9% next statement when interest hits. That’s $900 of your $2000 but it’s well-spent in this way. You could then pay off the LOC and the smaller Amex balance with what you have left. It wouldn’t leave you anything for the other debts but you’d have two accounts at zero balance which helps in two ways - one, it’s two bills you won’t have next month (outside of a small figure for trailing interest, don’t forget to pay that as soon as your statement cuts), and mortgage scores react strongly to zero-balance accounts, so they should help that way.

Visa 2 is in a great place UTI-wise, so just keep up on payments there and try to put as much into your other cards as you can, especially that second AmEx. You’ll have to decide whether paying off the LOC is better than putting that $650 toward the Amex bill - long as you can throw some good money at the Amex, I’d pay off the LOC but if it’s questionable, put it toward Amex.

[Anonymous]

Thanks- after putting a bit more thought into it and reminding myself of the "tiers" of utilizaiton, I thought the same regarding the CITI. 

I was thinking the same regarding the AMEX, which is essentially "maxed", as well.

Then paying off the other AMEX (% is much higher than the LOC) and paying down the LOC as much as possible.

Thanks again!

J

[Anonymous]

Sounds good. Two zero accounts would be great but I think you’re right about making progress dropping down as many accounts as you can.

[SouthJamaica]

---

@Anonymous wrote:

Hello:

I won't bore everyone with all of the details, but my credit went from ~ 725 to 591 in about 12 months.

Massive utilization (51%), 5 OLSA (student loan) accts that went to 90 days late (disastrous circumstances) and 2 CC's that went over the limit on 3 billing cycles (that's 3, total, between the two cards). Awful. Embarassing.

Now, I want to consoldiate about $13K in CC debt into a new mortage, but I need my 591 to go to a 620.  Here are the CC situations:

CITI: LIMIT $6100 BALANCE $6200

AMEX 1: LIMIT $1000 BALANCE $463

AMEX 2: LIMIT $3000 BALANCE $2850

VISA 1: LIMIT $2000 BALANCE $1625

VISA 2: LIMIT $16,000 BALANCE $2875

RESERVE LOC: LIMIT $1000 BALANCE $650

I don't expect a magic bullet here, just asking: if you had $2,000 to apply to the above, right now, what would be the best methodology? 

My thought is to put $300 towards the CITI to get it off the (absurd) 100% utilization. Then, I'm not an expert, but am I best off knocking the utilization % way down on the smaller limit cards (pay down the AMEX 1 under 10% (or "x" %?), as well as the reserve line) and then spread the remaining $1000 across the remaining? 

Short of those tragic (5) 90 days delinq's (of COURSE they ((the separate loans)) all report separately, even though it's a single monthly payment). Otherwise my payment history is near perfect (99+%- which we know in the "credit game" is a step away from poor) and the (3) over the limit dings I can't do anything about (calling to have removed an option?).

I'm disgusted with myself, the utlization was hard to avoid but the aforementioned was sheer laziness/absentmindedness. 

It's still hard for me to believe that they above- over 19 years- or 7 years - or 2 years - or 12 months puts me in such an awful credit position, but it does. But complaining about the privatized, profit-driven world of credit scoring is for another time.

Thank you so much in advance for the help.

Best,

J

---

Since you're talking mortgage scores, which love zero balances, I would pay off Amex 1 and the LOC and apply the rest to Visa 1.

[Anonymous]

Thank you.
 
This is all so convoluted, what is the distinction with "mortgage scores", if i may ask, please? I know my lender relayed that they used the Fico 8 and wanted a 620 or above.
 
I would suspect that once all of this CC debt is rolled into a new mortgage and all accounts go to a zero balance, I should have a much different situation in 4-6 months.
 
 
My hope is that one day all of the privitization, secrecy and for-profit motivation of this "system" becomes a transparent, pro-consumer structure that goes a bit beyond- 35% payment historty, 30% utilization, etc, lol.  I doubt it will occur anytime soon, but I believe one day it will. 
 
Thank you
J

[Trudy]

Each model (FICO 8 Classic, FICO 9 Classic, Bankcard scores, Auto Scores and Mortgage scores) respond different to the same activity.  I'm sure more detailed knowledgeable members will specify.  But for example, Mtg scores may respond more favorably to lesser # of accounts reporting a balance, whereas, FICO classic or basic scores don't put as much weight on this factor.

If you have a subscription to MyFICO, or simply do a one time pull you will see the reason codes and often those that are impacting most will be the top reason codes.  You can then work on that.  Again, this is a generic response and others can give more detail but I'm pretty sure through following scores and trends and this forum for the past 3+ years that the # of accounts reporting a balance on all accts, not just CC have a significant impact on your MTG scores.

I'm surprised your lender referenced FICO 8 as almost all MTG lenders are required to used the MTG scores which at this time only has 1 version, which is an older model and mores sensitive than newer models like FICO 8.

https://www.doughroller.net/credit/which-fico-scores-do-mortgage-lenders-use/

[Anonymous]

Ok folks, things have changed a bit and I think I should head in a direction that seems obvious to me...which means it's prolly dead wrong in the shenanigan-filled world of credit reporting/scoring:

To refresh/update:

                      BALANCE        LIMIT

AMEX 1           $500              $1000

AMEX 2           $2900            $3,000

CITI                  $5,700           $6,200

VISA PLAT 1   $1900            $2,000

RESERVE        $650.00          $1000

VISA PLAT 2  $3,000              $16,000

Now, in addtion to having about $3,000 in cash to apply- the Visa Plat has a 10% APR. ALL of these others are higher, with the AMEX's and CITI being grossly so. I can take a cash advance out on the PLAT 2 at the same 10%. 

SO tell me taking a ~ $11.5k advance out of the Plat 2 and either paying off - or paying down to under 9% is not the way to go? Then, apply the $3K to the Plat 2 or paying everything off and applying the balance to the Plat 2?

This of course would feel good - paying off 5 accounts- but it would also move all of that debt balances down 10-20 points, to 10%.

No brainer, right? I did not mention the Plat 2 cash advance rate in the first post, apologies.

I just get the feeling that paying off 5 accounts and having a single account at ~ 70% is going to be much better for me.

Thanks in advance!

J

[Revelate]

If there isn’t a cash advance fee and you can self-refi down to 10% from 25% IIRC, hit that and pay off the highest APR card and then move on to the next one.

Just triple check the cash advance finances before doing so... if there isn’t an additional fee then frankly it is an easy financial decision, and a credit win too.

[Anonymous]

Thanks and right: it really is an easy decision.

My only concern was related to the semi-insane world of scoring and if - all of a sudden- loading up a single card to 70% from 20% would hurt me somehow more than paying off 5 accounts.

Anyone who spends 10 minutes looking into these scoring models becomes readily aware that a good percentage of this is NOT intuitive.

This will all be “fun” to watch anyway. I am - unless I apply the $3k right away- simply shuffling around the identical amount of debt over the same cards with the same limits. It is the epitome of a shell game.

Yet the scoring models are so unsophisticated (convolution is not necessarily synonymous with sophistication) that I am betting that I will see an inexplicably sizable uptick in a month or two.

It will be humorous- if not enjoyable- to take in.

Thanks
J