I'm hoping for some insight on the best way to proceed. I'll try to be brief, but if more details are needed I'll gladly provide.
Goal is to raise my credit score (in the mid 500s currently). Want to qualify for a home in the next 9-12 months if possible.
Currently have a lot of CC debt and a loan with Avant.
First Premier (2) - $650, $750
Capital One - $3300
The Limited Store Card - $1350
Credit One - $600
Credit Union - $5100
Avant - $6500
I enrolled in a debt settlement program about a month ago. A couple cards have gone past 30 days at this point, since the program says I shouldn't pay the companies directly so the program can negotiate on my behalf. They say it takes about 90 to 120 days of no payment for most companies to be willing to settle, and they settle for up to 50% less than what I owe (typically).
At the time I enrolled, I really needed it. The monthly minimum payments were getting me nowhere fast and I was surviving on ccs basically. I pay $265/month for the Avant loan (which has a terrible interest rate of course; I've barely made a dent in the principle and it's been a year). With the program, I pay them $290 a month until all debts are settled, which they say may take time (up to 38 months). They also said after 6 months (approx. Feb 2017) they will review my account for a total settlement loan, which means they will pay off all my debts and I'll just have a loan with them only.
During all of this, I got a huge promotion which will bring in about $500 extra a month.
My question is - is it smarter to throw the $500 extra a month on the cards in a "snowball" fashion, or dump it into the program to settle debts faster?
At this point all of the cards except the Credit Union are about to report 30 days late, so either way I'll have to try and clean that up on the back end. So I'm wondering since I'll have lates reporting soon anyway, if I should just proceed with the program and dump as much money into it as I can, or if I should try and pay off the small cards asap then tackle the bigger ones.
I won't receive my first paycheck from my new job until the end of September, so lates will definitely be reported by then.
Just trying to figure out what is the smartest move, which direction will be "easier" to clean up at the end, which direction will increase my credit score the most/fastest, etc.
Thanks so much. All (helpful) insight welcome.