Jump to content

Sign in to follow this  
deerfern

Which card to pay down to increase score?

Recommended Posts

Hi,

 

I have a 665 (EQ) and 646 score (TU).

 

I have credit utilization of about 46%.

 

Some of my cards have 0 balance offer which ends soon (Sept & Nov). I have been trying to pay them off but it probably won't happen completely by the time the offer ends. The one I want to pay the most has a high interest rates of about 25%. It's at $6900, limit is $14k (Crap1).

 

I also have a card at it's limit ($16k), with interest rate of about 11%. (NFCU)

 

I will be getting about $5k in a few weeks.

 

Does it matter which card I pay down to best increase my credit score (by lowering my amount due)?

 

I would prefer to pay down the zero interest card first as it has the highest interest rate, so that when the offer ends, I won't be paying a lot of interest based on a high amount, back dated from a year ago.

 

Once either is done, and hopefully my score goes up, I would like to apply to another creditor for a zero balance transfer. Maybe Discover It?

 

Also I have a Chapter 7 in 2013.

 

Thanks for any insight here!

 

 

 

 

Edited by deerfern
correct figures

Share this post


Link to post
Share on other sites

The NFCU card that's at $16k out of $16k is by far hurting more than the Capital One at < 50%.

 

Focus your additional payments on the one that's maxed.  Dumping $5k on it should provide some immediate score relief.

 

With that said, if you are citing Kredit Carma skores you don't have a valid frame of reference.

 

If you want a new BT card the chances that an issuer will pull the skore that KC uses is nil/zero/nada/zip.

Edited by cv91915

Share this post


Link to post
Share on other sites

Hi cv91915 and thanks.

 

I will dump the $5k into the maxed out $16k NFCU card. But it is hard for my brain to wrap around that I'm paying down the lower interest rate card to get my credit score up!

 

As to the scores, I used myfico (TU) and trustedid (EQ). I didn't pull EX.

Share this post


Link to post
Share on other sites
24 minutes ago, deerfern said:

Hi cv91915 and thanks.

 

I will dump the $5k into the maxed out $16k NFCU card. But it is hard for my brain to wrap around that I'm paying down the lower interest rate card to get my credit score up!

 

As to the scores, I used myfico (TU) and trustedid (EQ). I didn't pull EX.

FICO doesn't know what your interest rates are.  It just scores the data that's in your credit report.

 

Glad you have TU FICO.  I can't tell from the TrustedID site which score they use... hope that's also a FICO.  

 

Most people who post TransUnion and Equifax scores only are citing KC.  Sorry for the incorrect assumption; i was going by the numbers.  :)  

Share this post


Link to post
Share on other sites

If it's any consolation, I don't think Cap 1 will charge you interest on the original amount- just your current balance when the promotional rate expires. May want to check the fine print though. 

 

Are those your only cards with a balance? 

Share this post


Link to post
Share on other sites

Personally, I wouldn't worry about scores. You have OK credit and scores are meaningless unless you need to apply for new credit like a mortgage. The difference in interest rates is simply too large and paying off the maxed out one may give you the best score bump but it will cost over $500 more in interest over the next 12 months. I'd go for the higher interest payoff.

Share this post


Link to post
Share on other sites

As noted above, most credit card free-money offers are NOT like a store promo.  A store promo that does a zero percent deal WILL generally backdate to the purchase.  However, MOST credit card offers are going to just look at the balance on the day the offer expires and begin the interest accumulations on that day. 

 

You will want to ensure that NO purchases are put on the card once the offer expired UNTIL you get it paid down to where you are paying balances in full each month.  Otherwise, you will be paying interest for quite some time. 

 

Also as noted, focus on what makes the most financial sense.  A score is a three-digit ego feeder except and unless you have an actual purchase or application on the horizon where it is going to matter.  This holds true whether it comes from one of the tri-merge services (which are not accurate in most cases to begin with) or whether you had paid for the score directly from Fair Isaac (no matter which model of their scoring you were being robbed for). 

 

You ALSO need to be looking for cards that have better rates (and likely better rewards).  Admittedly, rewards become rather moot if you carry balances and are paying interest.  You want to be in a position where you are paying no interest while reaping the benefit of the rewards offered by a variety of card products. 

Share this post


Link to post
Share on other sites

Always pay by APR.

 

If you have a 0% offer expiring within days that will switch to 25%, definitely throw all funds towards it. 

 

If you're fortunate C1 will offer you another BT promo on that card once it's paid off, in which case you should max it out on a BT from NFCU.

Share this post


Link to post
Share on other sites

Wow, some really great information and advice from everyone here.

 

Cashnocredit, good thought and point. That's my dilemma. So now I'm back to thinking I should pay off the zero balance C1 first.

 

I only want my score up so I can get another BT card to transfer any balances that aren't paid off by their expiration and the 16K NFCU at 11 % (if I can get a limit to cover all that).

 

I also understand zero interest BT cards will only charge interest on the remaining balance, so I'm ok with understanding there. I'm not adding any charges to the zero interest one.  Although I admit I have charged some, but then paid over the minimum and enough to pay off the amount I charged. No interest was charged that way.

 

The 5K is coming out of my 401k, and it's getting very depleted. I retired early (lost job) and have medical family issues so it's a situation.

 

Probably too much information here, but here goes. I want to get a zero balance BT card to transfer as much as I can so I have time to pay it off. I have that 5K coming in and I don't know where to apply it best.

 

My cards are:
-----
C1 $6,900, limit $14,000.
$2,616 promo expires 10/28
$4,284 promo expires 11/28
interest rate after promo 24.15%
1% min pay.
-----
NFCU $3,650, limit $16,000
$3,650 promo expires 10/23
interest rate after promo 10.24%
2% min pay
-----
NFCU $16,000, limit $16,100 (yes I have 2 NFCU)
no promo
Interest 12.65%
2% min pay
-----
Consumers CU $1,000, limit $1,000
Interest 25.99%
2% min pay
-----
Sam's Club MC $1775, limit $2,400
Interest 23.90%
2.6% min pay

-----
Paypal $260 (I can pay this off)
1.65% min pay
-----
Home Depot $200 (I can pay this off)
2% min pay
-----
Greensky Installment Loan for house repair $1,250, limit 7,500
Interest 9.99%
Must make $43.04 payment every month.
This means my payment is around 3.5%, goes up as balance goes down.
-----
Toyota Auto loan $410/month, balance $24,425, limit $27,760
Interest 1.9%
-----
Investment Property Townhome Rental -
Mortgage $710/month, balance $53,400

Interest 3.75%, 30 years, ends 6/2036 (18 years to go!)
Rented for $1200/month, lease ends 12/2018, good tenant.
-----
Association for mortgage $42/month
-----

My only other bills are food and phone for myself and daughter. No rent as we both live with a relative.

 

I am on SS, widows pay. My income is from that and the rental.

 

Situation is almost critical. I do not have enough in the 401 to pay off the mortgage, or I would do so, since it is the largest outlay. I can't go bankrupt again (Chpt 7 -2014 bankruptcy) and even if I could, the equity is high, they would make me sell it to pay off the cards. Or, they would say I don't make enough to pay it if I lived there.

 

 

 

 

Share this post


Link to post
Share on other sites

Well, that complicates things. Given the BK you may, or may not, be able to swing a BT if you pay down the high balance, low interest card. You have 50k or less in your 401k. Since you are retied, are you able to withdraw from it w/o penalty? Generally, paying CC bills with 401k funds is not a good idea as 401k funds are protected from creditors.

 

The mortgage is the last thing you should pay off.

 

Remember, BT's aren't interest free. There is typically a transfer fee of 4% +/- so make sure you factor that in.

 

Living with a relative rent free helps a lot. The rental income-mortgage is not your net though. You have to consider unexpected expenses relative to keeping the home up.

 

Much depends on your equity which is likely pretty decent since you have owned the home over 12 years and haven't refinanced. You might consider selling it when the lease ends. I think home prices are starting to peak. You can likely get rid of your debt and have some left over.

 

You need to go through your budget and perhaps simplify your finances. Your baseline since you are living with a relative is quite low, You could well be better off with just SS and tiny amounts each year from your 401k with no debts even without rental income.  Especially since CC interest isn't tax deductible.

 

Need to do the math and sketch it all out.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  




  • Today's Birthdays

    1. pks3541
      pks3541
      Age: 63
  • Member Statistics

    • Total Members
      178,020
    • Most Online
      2,046

    Newest Member
    sterngegill123
    Joined

About Us

Since 2003, creditboards.com has helped thousands of people repair their credit, force abusive collection agents to follow the law, ensure proper reporting by credit reporting agencies, and provided financial education to help avoid the pitfalls that can lead to negative tradelines.
×
×
  • Create New...

Important Information

Guidelines