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Consolidating CC debt and paying off


morpheus0327
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Need to know how to go about.

 

I have 16 accounts in my credit history (14 years old) of which 5 are active credit cards, 6 paid loans, 1 unpaid loan (just started). Remaining closed CC's.

2 inquiries (feb 2017 and June 2017).

High utilization ratio (61%).

No delinquency, no other negative or red flag.

 

Scores in 680-705

 

2 weeks ago, utilization was 81%. Got a small 'secured' loan from credit union (nice APR 4.19%). They refused to give regular unsecured, due to high utilization of 81%. After paying off CC's util got to 64%, then added some more personal savings and brought it down to 61%.

 

Credit union said, "had you not had high util, we'd have given you a fat (=20K, excuse me experts) unsecured loan due to your good payment history. Come back in 2 months, when updated CC-util shows up on bureau reports, and we'll be able to give you additional consolidation loan to get to 0%".

 

Tried the Lending Club loan prequalifying tool: 13.99% APR for the amount for 0% util.

 

Did calculations - based on income and expenses, I should be able to get debt free in 15 months easily, i.e. after payment of the total loan. (credit union, or high APR Lending Club)

 

Should I wait 2 months and approach my credit union, or haste for Lending Club?

What else should I do to 'up' the scores and reduce debt faster?

 

<On my way to copy-station to get FCRA printed: will read through the weekend>

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have you tried to roll the balances to new cards with BT promos? that can save the most money so you can pay everything off asap.

 

opening a lot of new loans to pay off current debt can kill AAOA so be aware of this impact if FICO is your main concern.

 

also, remember overall utilization and individual tradeline utilization matter... and even though it is not part of the traditional "revolving" utilization, balance to starting balance (i.e., "use" ) on installment loans also impacts

FICO08.

Edited by hegemony
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have you tried to roll the balances to new cards with BT promos? that can save the most money so you can pay everything off asap.

Haven't done that yet, was just worried for wrong reasons maybe. Actually I did that several times over 10 years ago, and some mistakes led to late-penalties. But life is much different now. I was apprehensive that high utilization may not qualify me for BT cards and leave with un-fulfilled inquiries. Sour grapes basically.

 

You think I might qualify for those cards with 61% credit usage?

 

 

opening a lot of new loans to pay off current debt can kill AAOA so be aware of this impact if FICO is your main concern.

 

also, remember overall utilization and individual tradeline utilization matter... and even though it is not part of the traditional "revolving" utilization, balance to starting balance (i.e., "use" ) on installment loans also impacts

FICO08.

Thanks for the insight: "new-found wisdom".

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List out balances, limits and APR's and help will be on its way.

 

Absolutely!

Thanks to the spreadsheet at https://creditboards.com/forums/index.php?showtopic=237067

 

---------------------------------------------------------------------------------
Name: Limit Balance Utilization APR
---------------------------------------------------------------------------------
CaptOne: $2250 $801 35.6% 18.65%
Chase Slate: $3200 $2,158 67.4% 27.99%
Chase Freedom: $6400 $4,112 64.2% 12.99%
Citibank: $7930 $4,806 60.6% 18.99%
Discover: $6200 $3,962 63.9% 29.99%

---------------------------------------------------------------------------------

 

Any help, insight, recommendation or advice is warmly appreciated. ^.^

Edited by morpheus0327
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I would check out Sofi. I just got a $50k unsecured loan from them after one of my friends got a $75k loan. My EXP was 715, although my income is fairly high($170k W-2). And I got 8.95% interest rate, no closing costs to originate. Took about a week. PM me if you want, as I have a code for a free $100(I get $300). My Util was right around 25% as I am acquiring an existing business right now.

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Keep in mind, you don't need to pay all your debt down to get to a position where your credit score is high. You just need to get your available credit much higher than it is now, and get your interest rates much lower than they are now. If you get 3x the credit lines of your current portfolio, then instead of 81% utilization you'll be at 28% utilization, which is seen as low-risk. And if you can get 3% fee, 0% balance transfer offers for 12 months, then instead of paying an average of 20% interest on your $17,000 debt -- $3400/yr, you'd only be paying about 4% interest, which, on $17,000 debt is only $720/yr. So, your options are not limited to moving current credit card debt over to other types of loan products, you can also pay your debt down partway and work with your existing lenders to leave the debt on your credit cards while you pay them off.

Here's some elements to this strategy:

 

Call Discover and ask for a APR (interest rate) reduction. If you've been with them a while they ought to lower it a few percentage points. I don't know if this will apply to the existing balance or not. But, no harm in trying. Might as well call Chase, Citi and Cap One, too.

Pay off the Cap One card first. Then, between 0 and 2 months after it's paid to zero, you'll get it on the "grace period" program, where you won't pay interest on purchases as long as you pay each month's statement balance in full by the due-date. Then, shift all of your spending to the Cap One card, and you won't be paying interest on current expenses. (be very careful not to spend any more than you absolutely need). So, if you have, say, $1000 of spending each month, and put it all on the Cap One card, you'll be paying 0% on an average balance of $1500 over the course of the year, which will save you $200 to $400 in interest each year (depending on whether you'd have put the spend on the Freedom or one of the 30% interest cards).

You might then have better luck at getting a CLI (Credit Line Increase) with Cap One, also, which would improve your overall utilization. And you could put more spend on it each month.

And at some point you'll start to get "0% for one year" balance transfer offers from any of your four banks, which will have a fee of 3% or 5%. Which will allow you to transfer high interest debt into lower interest debt.

These are the ways you can save $ on interest in your current situation. And the more you get them paid down, the better your credit score, and the more likely you'll be to get APR reductions, CLIs and 0% balance transfer checks.

Since you're only 15 months from being debt free, you're probably only 6 months away from getting to the point where one issuer or another will start to give you very reasonable interest rates. And after the monthly interest charges go down, you'll accelerate the rate of principal pay-down, which will further improve your eligibility for new credit, etc.

 

So, instead of fussing with various loan products, just bite the bullet, curtail spending, pay down the debt, and pay that stuff down. Then, in a matter of six months, you'll be eligible to apply for new cards with generous credit lines, or get decent credit line increases on existing cards, and your credit worthiness will be very good.

FWIW,
MP

Edited by moneypyts
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I would check out Sofi. I just got a $50k unsecured loan from them after one of my friends got a $75k loan. My EXP was 715, although my income is fairly high($170k W-2). And I got 8.95% interest rate, no closing costs to originate. Took about a week. PM me if you want, as I have a code for a free $100(I get $300). My Util was right around 25% as I am acquiring an existing business right now.

 

I didn't know SoFi before - after your reply I researched more here on CB and general on google. Also did their pre-quals. Got a max of $35K which I think is quite generous. If I do a $10-20K with them, rates are in the ball-park of 10%. Nice!

 

Deeply appreciate the $100 offer! I'll PM you once I'm ready to make that decision - currently cogitating over all above-mentioned suggestions.

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Pay off the Cap One card first. Then, between 0 and 2 months after it's paid to zero, you'll get it on the "grace period" program, where you won't pay interest on purchases as long as you pay each month's statement balance in full by the due-date. Then, shift all of your spending to the Cap One card, and you won't be paying interest on current expenses. (be very careful not to spend any more than you absolutely need). So, if you have, say, $1000 of spending each month, and put it all on the Cap One card, you'll be paying 0% on an average balance of $1500 over the course of the year, which will save you $200 to $400 in interest each year (depending on whether you'd have put the spend on the Freedom or one of the 30% interest cards).

 

 

 

You read my mind! Cap One is the snowball.

 

 

Call Discover and ask for a APR (interest rate) reduction. If you've been with them a while they ought to lower it a few percentage points. I don't know if this will apply to the existing balance or not. But, no harm in trying. Might as well call Chase, Citi and Cap One, too.

 

Another mind read - I have been calling Discover once a month since the past 2 months. Their customer service completely refuses to lower current APR, saying they won't lower 'because those were the terms I signed up for'... I'd be like 'Hey, my APR was lower before, went high after a late payment, then reduced once and went up high again'. But their customer service is dumb. Next time I'll talk to a supervisor.

 

They are however willing to do a lower APR on future purchases, but I didn't get into that.

 

Wish I knew how to talk the Discover customer service into getting the APR lowered. :grin:

 

I'll start calling the remaining creditors now.

 

Since you're only 15 months from being debt free, you're probably only 6 months away from getting to the point where one issuer or another will start to give you very reasonable interest rates. And after the monthly interest charges go down, you'll accelerate the rate of principal pay-down, which will further improve your eligibility for new credit, etc.

 

So, instead of fussing with various loan products, just bite the bullet, curtail spending, pay down the debt, and pay that stuff down. Then, in a matter of six months, you'll be eligible to apply for new cards with generous credit lines, or get decent credit line increases on existing cards, and your credit worthiness will be very good.

 

 

I'm letting this sink in. I perhaps had a wrong impression that until I get 'debt-free' or reduce my utilization considerably, I won't qualify for any CC's. But as I read more, it appears that everything is a loose but solid game.

 

Thanks for the demystification. :angel:

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>They are however willing to do a lower APR on future purchases, but I didn't get into that.<

Might as well ask for it and take it. If nothing else, it indicates that they don't find you to be a highly risky borrower, and it may help in future internal assessments of their considerations to extend you more credit. i.e. if they think that you can handle $6000 of debt with them at 30% interest, it stands to reason that they'll figure you can handle $12,000 of debt with them at 15% interest.
Not guaranteed 1:1 relationship, but there have to be some internal evaluations like that.

This would
extend your credit limit. Not that you would want to use it, but it would help improve your credit utilization, and thereby improve your credit worthiness to other lenders.

 

Another thing is to change your Slate card into one that earns purchase rewards. You could call them and is if they will Product Change it to a Freedom Unlimited card, which they are known to do without any issues. If you're soon going to be in a position to pay down a couple more $, then you can get the Slate/Freedom Unlimited paid down to zero, get the grace period going, and move your monthly purchases over to the Freedom Unlimited and get 1.5% cash back rewards on purchases.

 

Keep in mind, though, that the psychology of getting 1.5% cash back could easily result in you spending more than you would otherwise, and end up costing you $.
https://www.nerdwallet.com/blog/credit-cards/credit-cards-make-you-spend-more/
http://www.businessinsider.com/studies-help-explain-why-credit-cards-make-us-spend-more-2014-7

Good luck!

 

MP

Edited by moneypyts
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>They are however willing to do a lower APR on future purchases, but I didn't get into that.<

 

Might as well ask for it and take it. If nothing else, it indicates that they don't find you to be a highly risky borrower, and it may help in future internal assessments of their considerations to extend you more credit. i.e. if they think that you can handle $6000 of debt with them at 30% interest, it stands to reason that they'll figure you can handle $12,000 of debt with them at 15% interest. Not guaranteed 1:1 relationship, but there have to be some internal evaluations like that.

 

This would extend your credit limit. Not that you would want to use it, but it would help improve your credit utilization, and thereby improve your credit worthiness to other lenders.

 

Another thing is to change your Slate card into one that earns purchase rewards. You could call them and is if they will Product Change it to a Freedom Unlimited card, which they are known to do without any issues. If you're soon going to be in a position to pay down a couple more $, then you can get the Slate/Freedom Unlimited paid down to zero, get the grace period going, and move your monthly purchases over to the Freedom Unlimited and get 1.5% cash back rewards on purchases.

 

Keep in mind, though, that the psychology of getting 1.5% cash back could easily result in you spending more than you would otherwise, and end up costing you $.

https://www.nerdwallet.com/blog/credit-cards/credit-cards-make-you-spend-more/

http://www.businessinsider.com/studies-help-explain-why-credit-cards-make-us-spend-more-2014-7

 

Good luck!

 

MP

 

 

I'm giving sincere thought to your suggestions - already did few negotiations with customer service (based on your recommendations) and they were fruitful, not anywhere near a fortune, but its great to see movement.

 

At this point paying off looks rosier than accumulating points.

I do all spending on cash and that way I have established say a tough-to-form habit of not touching credit cards.

 

Once I get to somewhere around 20% I'll start juicing rewards.

 

Thanks yet again, MP. :wave:

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have you tried to roll the balances to new cards with BT promos? that can save the most money so you can pay everything off asap.

 

opening a lot of new loans to pay off current debt can kill AAOA so be aware of this impact if FICO is your main concern.

 

also, remember overall utilization and individual tradeline utilization matter... and even though it is not part of the traditional "revolving" utilization, balance to starting balance (i.e., "use" ) on installment loans also impacts

FICO08.

 

Few months ago I 'opted-out', after perhaps reading PsychDoc's recommendation.

I don't get any BT promos. You think I should 'opt-in'?

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have you tried to roll the balances to new cards with BT promos? that can save the most money so you can pay everything off asap.

 

opening a lot of new loans to pay off current debt can kill AAOA so be aware of this impact if FICO is your main concern.

 

also, remember overall utilization and individual tradeline utilization matter... and even though it is not part of the traditional "revolving" utilization, balance to starting balance (i.e., "use" ) on installment loans also impacts

FICO08.

 

Few months ago I 'opted-out', after perhaps reading PsychDoc's recommendation.

I don't get any BT promos. You think I should 'opt-in'?

 

yes.

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have you tried to roll the balances to new cards with BT promos? that can save the most money so you can pay everything off asap.

 

opening a lot of new loans to pay off current debt can kill AAOA so be aware of this impact if FICO is your main concern.

 

also, remember overall utilization and individual tradeline utilization matter... and even though it is not part of the traditional "revolving" utilization, balance to starting balance (i.e., "use" ) on installment loans also impacts

FICO08.

 

Few months ago I 'opted-out', after perhaps reading PsychDoc's recommendation.

I don't get any BT promos. You think I should 'opt-in'?

 

yes.

 

Thanks!

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  • 1 month later...

 

Pay off the Cap One card first. Then, between 0 and 2 months after it's paid to zero, you'll get it on the "grace period" program, where you won't pay interest on purchases as long as you pay each month's statement balance in full by the due-date. Then, shift all of your spending to the Cap One card, and you won't be paying interest on current expenses. (be very careful not to spend any more than you absolutely need). So, if you have, say, $1000 of spending each month, and put it all on the Cap One card, you'll be paying 0% on an average balance of $1500 over the course of the year, which will save you $200 to $400 in interest each year (depending on whether you'd have put the spend on the Freedom or one of the 30% interest cards).

 

You might then have better luck at getting a CLI (Credit Line Increase) with Cap One, also, which would improve your overall utilization. And you could put more spend on it each month.

 

And at some point you'll start to get "0% for one year" balance transfer offers from any of your four banks, which will have a fee of 3% or 5%. Which will allow you to transfer high interest debt into lower interest debt.

 

 

I sincerely appreciated your suggestions, MoneyPTS. So in the past month, I managed to payoff Capital One with $0 balance and also their post-PIF interest. At present I have put all the monthly expenses on that card and will PIF before the statement cuts. I haven't asked them for a CLI yet - waiting for another 2 statements to cut and $0 to show consistently.

 

Also took a leap of faith and pressed the trigger (maybe bad idea) to avail a CITI Simplicity and AMEX with 0% for respectively 21 and 15 months (though very low CL's to be useful, $900 and and $500 respectively).

Got a JC Penny card and managed to get CLI up to $5000 (after an initial $1800). I'm consistently paying off the other cards, but couldn't help put a few hundred bucks on new cards due to a recent international travel. Today, following is where I stand.

 

 

Name Credit Limit Balance Utilization APR CapitalOne Plat $2,250 $0 0.00% 18.65% Chase SLATE $3,200 $2,094 65.44% 27.99% Chase FREEDOM $6,400 $4,116 64.31% 12.99% Citibank $7,930 $4,869 61.40% 18.99% Discover $6,700 $3,666 54.72% 29.99% Citi Simplicity $900 $569 63.22% 0.00% AMEX Ev. Cash $500 $226 45.20% 0.00% JCPenny $5,000 $78 1.56% 26.00% Total $32,880 $15,618 47.50%

 

 

After having learned PIF'ing before statement cut date on Capital One, next target is the Chase SLATE, which I could pay up in the next 4-5 months.

 

(Thanking Hegemony) I checked my mail yesterday and pre-approved offers are coming in - though not enticing at this point (i.e. no BT promos).

So far not much luck (even after recon'ing) with any CLI's (except JC Penny) and a meager $500 with Discover.

 

Current FICO's (CCT) in the range 685-700. AAOA 8 years, oldest CL 14 years.

 

Experience-less CLI attempts with CITI and Chase, along with new CL's caused about 4 inquiries in the past month on average per bureau.

 

I can pay between $1000 to $1200 per month to get the debt down, but due to high interest rates, it's hardly noticeable.

 

Just found out that Capital One pre-approved me for their 'quick silver' and yet another Platinum (no 0 % yet).

 

Planning on gardening until anything useful/worthwhile shows up. Short term aims are to purchase a car. Long term: get some travel and rewards cards (eyes on Cap One Venture, MileagePlus etc) and purchase a house in couple years. Currently applying for new (higher pay) jobs too.

 

Want to know what else to do to rev up the credit situation and move towards goals. Still paying a lot of interest per month (about $300). :cry2:

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Sorry, the credit breakdown did not come right. Here it is again.

 

Name Credit Limit Balance Utilization APR

 

CapitalOne Plat $2,250 $0 0.00% 18.65%

Chase SLATE $3,200 $2,094 65.44% 27.99%

Chase FREEDOM $6,400 $4,116 64.31% 12.99%

Citibank $7,930 $4,869 61.40% 18.99%

Discover $6,700 $3,666 54.72% 29.99%

Citi Simplicity $900 $569 63.22% 0.00%

AMEX Ev. Cash $500 $226 45.20% 0.00%

JCPenny $5,000 $78 1.56% 26.00%

 

Total $32,880 $15,618 47.50%

Edited by morpheus0327
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I don't know what possessed you to apply for more CC's. Yes, it was a bad move, but it's too late now. Especially the Citi Simplicity! I hope you plan on paying these 3 off before the statement cuts. Also, you shouldn't even be using that Simplicity card for any kind of spend... it has zero rewards. At this point, get the other CC's to report 49% max. and concentrate on paying down highest APR for the time being.

 

eta - Pay off the Chase Slate next. The way you did with Cap One. Then you can apply those payments somewhere else.

Edited by Kat58
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I don't know what possessed you to apply for more CC's. Yes, it was a bad move, but it's too late now. Especially the Citi Simplicity! I hope you plan on paying these 3 off before the statement cuts. Also, you shouldn't even be using that Simplicity card for any kind of spend... it has zero rewards.

 

At this point, get the other CC's to report 49% max. and concentrate on paying down highest APR for the time being.

 

eta - Pay off the Chase Slate next. The way you did with Cap One. Then you can apply those payments somewhere else.

 

:-) Appreciate your sense of humor and advice (especially the 49%), Kat.

That's the plan for now.

 

Besides the objective of paying the balances or bringing them significantly down, what else would you recommend? Would it be worth risking HP's (in a few months) for a PenFed CC, say (for higher CL's)? I don't think I'd be approved for NFCU (no links to Navy). I do have a student who is a Navy captain, but I doubt if that would qualify me :-).

 

I'll pay off the Simplicity and AMEX in due course - I wonder if using the 0% would be disadvantageous accompanied by small FICO slumps, if it saves some money.

 

Thanks in advance for any replies and also for taking time for this one.

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Sorry, the credit breakdown did not come right. Here it is again.

 

Name Credit Limit Balance Utilization APR

 

CapitalOne Plat $2,250 $0 0.00% 18.65%

Chase SLATE $3,200 $0 0.00% 27.99%

Chase FREEDOM $6,400 $4,116? 49% 12.99%

Citibank $7,930 $4,869? 49% 18.99%

Discover $6,700 $3,666? 49% 29.99%

Citi Simplicity $900 $0 0.00% 0.00%

AMEX Ev. Cash $500 $0 0.00% 0.00%

JCPenny $5,000 $0 0.00% 26.00%

 

Total $32,880

 

When the above looks like this^^^ and has reported as such, come back here and we can discuss it further. In the meantime DO NOT APPLY for anything without CB's approval. This includes timing of CLI's.

 

Do you understand? I want to see the words :grin:

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Discover sent me a mail. A new / replacement card. I never asked for one. Turns out they upgraded me from Discover to Discover IT. More like an honorable mention keeping up a subprime status. DW muttered "Honey you've been working hard for the past some months. Congrats". Had Kat not nailed her claws on my app'ing spree, I might have gambled my luck on the IT last night. What a timing!

 

Sent from my Moto G (4) using Tapatalk

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Keep up the good work. I think the biggest thing to keep in the forefront is to pay on those balances. Paying $1000+ per month will get you out of debt.

 

If there are some credit maneuvers along the way to save you money, that's great, but ultimately paying the money off is what will get you there. It might sound silly but reading this forum makes applying for credit look like fun. Once I got out of debt I realized I had been focusing on the wrong thing....I put too much energy into playing the "game."

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Keep up the good work. I think the biggest thing to keep in the forefront is to pay on those balances. Paying $1000+ per month will get you out of debt.

 

If there are some credit maneuvers along the way to save you money, that's great, but ultimately paying the money off is what will get you there. It might sound silly but reading this forum makes applying for credit look like fun. Once I got out of debt I realized I had been focusing on the wrong thing....I put too much energy into playing the "game."

Thanks for the kind words. Yes I guess I'm realizing the bigger truths slowly. I am deeply appreciative of this community, for showing some relentless enthusiasm in giving time and attention to every newbie's individual concern (and conditioning).

 

Sent from my Moto G (4) using Tapatalk

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