So what to do.. what to do...

[RoadToRiches]

;D

I have a kind of a "nice" dilemma on my hands. Most of you know my scenario. So, let's see what you ladies and gents think about this idea.

Look at my sig...you see all the cards that I still have to pay. Consider that only open card is BMW and DB Visa. They are all VERY close to their limit. Balance transfers are out of question to those cards, plus, credit limits are not high on any of the cards anyways (1000 bucks)

My credit scores are: EX: 669, EQ: 610 and TU: 669 as of today. Obvioulsy, not good enough to get nice BT card. I would think I would have to bring them to at least 700.

By monitoring my score, I notice that it goes up every month by about 15-20 points across the board.

The biggest knock on my score is my outstanding balances too high for credit limits.

With that said, my monthly (15th every month) payments to all cards is $1200.

I am thinking, instead of paying scheduled 1000 in July on Amex Blue, to pay that 1000 across all other cards and bring my balance to credit ratio down. I would imagine that would really bring my score even higher. If this plan works like I think, I would have better chances to get approved for nice BT card. If not, I am looking at total spreadsheet payment plan rewrite and slight "penalty" in terms of interest that I would pay since right now my plan is setup for fastest payoff first with minimum interest paid.

Thoughts? I could really blast my credit to debt ratio and see what it gives me?

[Deleted]

What kind of interest rates are you paying?

Other than a balance x-fer card, is there any other reason for getting your credit score higher by a few months?

[greenstone]

If your target pay-off date is Dec 2011, I don't see the advantage to a BT, it seems a bit like chasing your own tail just to feel like you're doing something productive. By the time you qualify and are approved, you may only have a 2-3 months left at best. I am all for saving every penny but make sure the interest savings is truly worth it.

[blackcard]

Could you not get a debt consolidation loan from a bank or credit union? That could make all your cards a zero balance.

[Plain Old Petunia]

Your score for debt to credit limit ratio is not per card, it is in total. So if your total credit limit is 10k and your total amount owed is 9k, that is credit utilization of 90%, whether you owe 9k on one card or 1k each on 9 cards.

Have you tried calling your credit card companies and asking for a lower rate? I'll bet some of them would agree.

I agree with Greenstone. If you do a BT you typically owe a fee of 3-4%. If you do a BT this month and pay your balance off next month, you do not get that fee refunded. Remember, that is an upfront fee, it is not the same as paying 3-4% APR.

[phil5185]

to pay that 1000 across all other cards and bring my balance to credit ratio down. I would imagine that would really bring my score even higher.

Often the card companies lower the limit as you pay down the balance - so the ration doesn't change, they hold you close to 100%. But, as bonnap said - who cares? are you trying to get a loan?

[IPAfan]

I think a 0% balance transfer would make sense if you can improve your credit score, but only if you want start working on building up some investments for a while before finishing your CC payoff.

I figure if you can keep 0% interest rates (or effectively 3% if you transfer the balance 1X per year) then you can improve your liquidity by starting investment accounts. Plus, you'll be able to make 7%+ on your money long term. OTOH if you plan to payoff your debt in the next 1-2 years it's probably not worth investing since it's very possible to lose money with a short investment time horizon.

[motherto2]

I think you are doing an amazing job, and unless there is another reason for trying to get your credit score up like trying to qualify for a mortgage, I'd just stay the course. I think you would probably come out the same if you were to try and move things around. It always comes with a fee of some sort, and it's never to benefit the consumer. I know you are probably getting ansy, since you were able to wipe out several cards fairly quickly. I feel like that because my mortgage is my big ticket item left. Seems like it will take forever to get that sucker paid off! Keep up the great work!

[RoadToRiches]

Thanks for all suggestions. The ONLY reason why I would try to do something like that is to save on interest that I pay now.

Amex 16.25%
Patelco 15%
BMW 14%
DB Visa 8%
Citi - 29% in July, then who knows..most likely 13-14%
Chase - 0%

Not trying to get a loan or anything. Just though, if I would bring individual cards balance to credit ratio down, it would bring my score up, which would allow me to possibly get nice 0% or lower interest rate card to transfer balances. But I didn't think about that they look at overall debt-credit ratio, in which case, my plan wouldn't help.

Oh well, I guess I will just stick with my plan, since it's working ;D I was just throwing some thoughts out there.

[busymom]

Since CITI is 29%, I'd throw the most money towards that balance in the short-term. Otherwise, I think you are doing very well!

(I just wrote the check today to my highest interest rate card. One more month, and it's history!!) ;D

[RoadToRiches]

That 29% will be only for a month. So, next month (July) it will be at 29, then it "should" go down to 13-14%. It's been at 0% since I been on a plan, but since I completed their plan, the 0% offer is no longer in effect and they are putting me back to what it was before.

[TrixAre4Kids]

I'd be going after that Citi at 29%

[The Walk of the Penguin Mich]

Are you closing the cards as you're paying them off? If you are, that is what's giving you a high debt percentage. You can pay the cards off and leave them open without problems (provided you don't run them up again) and it'll give you a larger denominator to work with in your debt/credit balance.

[RoadToRiches]

I am not closing cards as I go. Some of them are closed though, long time ago. Couple are still open.

It's ok, I am just going to follow my program. I will see how that Citi pans out next month. Worst case, I will just shuffle things around and put Citi on the top. No biggy. ;D

[Wisconsin Beth]

Jun 15, 2011 20:21:09 GMT -5 RoadToRiches said:

That 29% will be only for a month. So, next month (July) it will be at 29, then it "should" go down to 13-14%. It's been at 0% since I been on a plan, but since I completed their plan, the 0% offer is no longer in effect and they are putting me back to what it was before.

yes, but you don't know when Citi will finish it's review (could be tomorrow, could be 2 months) and you don't know that they will give you 14%. And they're not going to credit you with the difference in the interest rates either.

[qofcc]

For your debt-to-available credit ratio, they take all of your debts and all of your available credit. Paying off the closed cards doesn't free up any extra available credit.

For the ones you paid off, if you can get them to reactivate the accounts (even if they lower your limit to a couple hundred dollars), you can make tiny charges every few months so that you can change your status to paid as agreed. As the delinquent months drop off to be replaced by paid as agreed months on an open account, your score will rise faster.

[RoadToRiches]

I do not have delinquent accounts on my report. It's just debt to credit limit ratio that messes me up. All my stuff is up to date and I always paid on time. I see that my score jumps about 20 points every month after the paid off card gets updated.

[qofcc]

If they weren't delinquent, why are they closed? You said the only open cards were BMW and DB Visa. If an account is listed as closed, there is no available credit to help your debt-to-available credit. If you were in good standing when you closed the accounts, you could just ask for them to be reactivated. That would greatly improve your ratio. They might even give you balance transfer offers.

[Wisconsin Beth]

I assumed he closed them when he started his debt paydown, to avoid the temptation to use them.

[wewillsee]

It looks like you are paying a good $1,500 to $2,000 per month, correct? At this point, I wouldn't worry about interest rates too much. If you keep going, in 6 or 7 months you will be all done anyway. That being said, in the last few months I am getting scores of credit card and balance transfer offers. Chase has the best balance transfer offer - zero fee and 0% APR for 9 months.

Out of curiosity, what company or service do you use to get your credit score? How much does it cost or is it free?

[8 Bit WWBG]

...:::"Have you tried calling your credit card companies and asking for a lower rate? I'll bet some of them would agree.":::...

Or request credit increases on one or two of the open cards. See if they will raise the rate after you make a big payment.

But as has been said, with $10k to go, and paying $1,200/month, the end is very close.

[haapai]

I agree with what many others have said. If your debt payoff horizon were longer or you had a vehicle on its last legs, spreading the money around might be smart. Improving the credit utilization ratio on several accounts probably would improve your credit scores somewhat and might lead to better offers.

But I don't see you carrying this debt for long enough for improved credit scores to matter.

Sweetening your credit scores by spreading the money would probably produce a nice little pop in your scores (once your creditors reported) but it would also make subsequent improvements much smaller. Why get greedy for positive feedback? You've got a nice little dual attaboy system going. You get a boost by making the payment, and another boost a few weeks later when the new balances are reported and improve your credit scores.

[RoadToRiches]

I closed them long time ago, like 2-3 years ago. I wasn't late on them or anything. I just had way too many cards and wanted to do something to stop temptation to charge stuff.

wewillsee, I use Amex's service. It's 11 bucks a month for all 3 reports and scores. I canceled it some time ago, but renewed it again just to monitor my credit. Good thing I did because I found some bogus collection entry on my reports! I got it fixed since then though.

I am paying 1200 a month on all cards. The current plan is setup for fastest payoff time for 1200 bucks a month. I went to cnn website and they have this calculator there. Plug in your numbers, interest rate and how/when you want to have it paid off. I came up with 1200 a month to pay on this stuff and it pretty much gave me schedule that I follow.

It's ok. I will just stick to my plan. I really have 6-7 months to go.

[qofcc]

I closed them long time ago, like 2-3 years ago. I wasn't late on them or anything. I just had way too many cards and wanted to do something to stop temptation to charge stuff.

well, now that you're a grownup and have learned to keep your hands out of the cookie jar, you can just re-open them if you're really concerned about increasing your ratio. You can always just cut up the card when it arrives, it's just the open account that counts.

[8 Bit WWBG]

I looked for that calculator, and this appears to be it: cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp Its a nice one. There are lots of good debt calculators (including android/iPhone apps).

[Clever Username]

I like blackcard's idea of a signature loan.
You could also address your credit score directly. If utilization ratio is your main fault, ask for a higher credit limit.

But please make dirt sure you're on a one way trip out of debt before doing that.