Credit Score

cantalopes24 · March 2014

Hi ladies! My husband I have some credit card debt we want to pay down to maximize our credit score because we want to sell our townhouse and buy a single family home. I've looked into several ways of doing this but what I'm really looking to do is lower balances to raise our scores as quickly as possible vs just pay them off one at a time. Quicken had a service I looked into before that did that but it looks like they no longer do. Our credit isn't awful and all the cards are open and payments are current. Anyone know of where I can find something like that? Thanks!

emily1004 · March 2014

I am not really sure what you are asking. What type of service are you talking about?

Sisugal · March 2014

What are you doing to pay those cards down?
Have you added to your payments (more than minimums)?
Using the snowball method?
Selling stuff you no longer need or want?
Eliminate or reduce non essential spending (eating out, etc)?
Get second jobs?
Do you have a budget? If not - start one now. For tne next month track your spending - every dollar. Then categorize the spending. Now - decide where you can reduce or cut. And apply the difference to the debt.
I would list your cards - the balance due and the monthly payment as well as interest rate along with your current income and budget. With that information we can be more helpful.

Xstatic3333 · March 2014

Do you mean that you want to lower all of your balances a little instead of paying off, say, 2 out of four cards entirely? Most of us here are trying to nip off all CC debt, but if you're just looking for a little score bump I think the goal is to have each card below 33% of your available credit, plus all your unsecured debt total below 33% of your total limits.

That said, I do recommend trying to get rid of your CC debt. It's a great feeling (and we were in pretty deep). Any method of paying it off is good as long as you stick to it and don't build more debt.

Ditto PP about posting more details and your budget. Is your credit decent to start with? Not asking to judge, just to see how much bump you'll need here.

Wulfgar · March 2014

Usually for credit cards, it is total owed versus total credit. So paying off say two out of four will be the same as paying all down.

As for credit score, if you have a good credit history with on time payments you will be fine.

cantalopes24 · March 2014

Xstatic3333 said:
Do you mean that you want to lower all of your balances a little instead of paying off, say, 2 out of four cards entirely? Most of us here are trying to nip off all CC debt, but if you're just looking for a little score bump I think the goal is to have each card below 33% of your available credit, plus all your unsecured debt total below 33% of your total limits.

That said, I do recommend trying to get rid of your CC debt. It's a great feeling (and we were in pretty deep). Any method of paying it off is good as long as you stick to it and don't build more debt.

Ditto PP about posting more details and your budget. Is your credit decent to start with? Not asking to judge, just to see how much bump you'll need here.

Yeah this is what I was looking for. Our scores are in the 600's and our current budget is good and we no longer use credit cards (except Target for the 5% but that gets paid same day as it's used). We had a lot of unexpected medical expenses and had to temporarily use credit to cover the gap because we both had to take unpaid time off work as well. My husband also got a promotion so we finally have a decent savings that I feel comfortable moving. Our goal is to pay them all off eventually but I'm just looking for what's going to make the biggest impact as quickly as possible. I had seen a forecaster through Quicken Loans that you could pull your credit report and it basically listed if you pay x y and z down to this balance your score will go up this many points but they revamped the thing and I don't see it on there anymore, they now want you to commit to using them for a mortgage it looks like. I can probably figure it out myself I just needed an idea of the ratio. Thanks everyone! If I have any more questions I'll be sure to get all my info together and be a little more specific.

Xstatic3333 · March 2014

Another thing I thought of is that you could join Credit Karma, which is a free but legit credit monitoring service. It has a feature where you can play around with various payoff scenarios and find out what effect they'll have on your credit score. Take it with a grain of salt, but it's fun to play around with.

hoffse · March 2014

Well there's no "quick fix" for credit scores. Quicken doesn't have anything to do with calculating your credit scores. That's the credit bureaus' job (equifax, experian, transunion). Quicken simply reports your borrowing and repayment history to the credit bureaus, if you have credit through Quicken.

The bureaus look at a lot of things to determine your score. But the #1 contributing factor to having a good credit score is time. They want to see a consistent pattern of behavior. For instance, H and I have waaaaay more available credit to us than most people in their 20's have or need. But I have to put a lot of business expenses on my card (reimbursable), and we anticipate H doing the same thing in a few months. Having that much credit open in our names hurt us for about 6 months until the credit bureaus saw that we don't spend all of it. We barely spend a fraction of it. We have had this huge amount of credit open since I started my job two years ago, and our scores are now higher than they were before we opened it (because it keeps our spending ratio low). But it does take awhile.

The "ratio" that you hear people talk about is your entire pool of revolving (credit card) credit combined measured against how much of it you spend. It doesn't really matter which card you spend it on - any given card can have a higher individual ratio than another. They simply want to see your grand total. H and I have such a large pool of credit because we like to keep our spending ratio below 10% of our available credit. Our cards have to be able to accommodate things like filing fees, golf, plane tickets, etc. So to keep all that plus our personal expenses below 10% takes a pretty high credit limit some months. But that's not particularly common. You really don't want more credit than you need to maintain a good ratio based on your average spending.

If I were you I would focus on paying these down as quickly as possible. Start with the highest interest rate and work toward the lowest. Seriously, credit cards are the worst form of loan out there, once their "promotional period" expires. If you had taken out a personal loan you might have a 4-8% interest rate on that money. Your credit cards are probably charging you upwards of 20%.

Paying them off will give you a small boost, and it will lower your spending ratio. Those are both good things. And then if you keep paying them off month after month your scores will slowly go up. But it does take time.

zzbb · March 2014

It does matter if your credit to debt ratio per card is high. If you have 8000 in debt on one card with a credit limit of 10,000 it looks like you are maxing out your limits. Verses having 5 different cards having 2,000 on a 6,000 limits. I think that if you can get each card around 30% of the balance that you would improve your score.

Start with the highest balance and "snowball" what you can afford to get that around the 30% range of that limit....then move throught the cards to get them all down. Make sure not to miss the minimum on the other cards. Then once that's done start working on the remaining balances by APR or highest balance whichever you think you will conquer best.

short+sassy · March 2014

I know what you are talking about. My loan officer when I bought my house helped me squeak out a few extra points higher by telling me exactly how much to pay down each credit card I had. He said their bank had a special software program that allowed him to put in the particulars for my credit report and give back the optimal balance for each card. Perhaps ask your loan officer if they have something similar?

It was odd stuff. One card, he told me to pay the balance down to $9. I said, "Well, why don't I just pay it off then?" And he said no, leaving the $9 balance would raise my score more than just paying it off.

However, generally speaking, the main thing you want to do if possible is keep the ratio for all your cards below 33% and below 25% is even better. To do it exactly, like I did, probably only added a few points as compared to just keeping the utilizations below 33%.

Sisugal · March 2014

Actually for the best interest rates on a mortgage you want your balances to be no more than 15% of the allowable limit. There is also a total limit of ALL debt (credit cards, student loans, car loans and other obligations such as child support etc ) that must be below 45% of your take home pay.
I would talk with a mortgage lender for their advice on your best path forward so you are doing what they prefer in order to get what you want.

Credit Score

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