repaying debt

[Anonymous]

Hi all,

New to to forum, but I'm determined to clean up my credit score.

I'm 33 yrs old, have a 660 Experian FICO score.

My biggest problem is having about $25,000 in revolving debt. I know it's a lot, but it used be close to 50! I've never had a late payment and have 46% utility rate.

I purchased a house 2,5 yrs ago on 100% financing 80% of that is interest only adjustable which is set to adjust in 3 months. The balance of the two mortgage is about $280, but the house now is only worth about $240.

I applied for a rate freeze or mortgage modification with the mortgage lender about 2 mths ago, but have not received an answer.

I fear that I may have to refinance if they turn down my request and the monthly payment goes up.

I have some savings, but not sure if I should use that to pay off cards to increase my credit score, or have that available for putting money down at the refi.

I'm trying to figure out ways to increase my score without actually paying off all my debt.

One thing I thought up was this:

I have two credit cards that I frequently use and charge about $5,000 a month and PIF after receiving my statement.

If I pay off most of that balance before the close date my CR should show a debt of only $20,000, right? Is there any disadvantage in doing this?

How many point would it mean for me?

I also had three inquries in the last 12 months and 2 of them will drop in 2 months. Would that mean a few points as well?

Thanks.

[Anonymous]

hey Speedy,

first of all, this forum is awesome, I got on here back in August and have had some great success by listening to the advice and learning the rules of the FICO game!

I had ~$11,000 in CC debt, and my scores were 580, 620, 610 "ish". I also had a BK that was ready to fall off. Surprisingly the BK falling off had no affect on my scores at all! ( bummer ) Anyway ... I recently paid down my debt to $6,500 and my total utilization ( total debt to credit available ratio ) is now at 27%. I purposefully went to below 30% to see what the affect would be before committing more money from my savings since Im on a 0%; balance transfer for a year.

I got a 27 point increase from Equifax and am waiting to see the affects on the other scores. My scores are now 672 ( Eq ) 708 ( Trans ) and 676 ( Exp ) which is virtually a 100 pt change since Aug. Aside from paying down debt ( biggest effect ) I ran some disputes to clear up incorrect data etc etc and I really had to put forth little effort to get some big results. Once this months report comes out Im going to see if its worth it to chunk down the money to get below 9% or just pay it off slowly over the next year while Im at 0% on my balance transfer ... any opinions??

So, your point increase will likely vary depending on other factors, but I think its safe to say you will get a noticeable increase when you go past the big utilization wickets of 50%, 30%, and 9% ( please tighten me up if those numbers are wrong folks ) .. Good luck and keep at it .. feels great to see a score over 700 after years of bad credit and lots of debt!!

Dave.

Message Edited by pilotguy72 on 06-13-2008 07:19 AM