Thread: How Much to pay down?

Hi All,

Quick question. I finallyu ogt my refi done, and came away with a bit of cash out. Now I'm trying to get a HELOC, but my scores are too low to qualify for what I need -- (I'm at 660ish, need 680+). Currently, I am maxed out on my ccs -- 23K with a 25K limit on one, 13K with a $14K limit on the other, and $14K on AMex sign & Travel account. I know my scores will jump by paying down the debt, but not sure how -- should I reduce debt on all the cards (I have about $20K I can use) or pay down one completely? What will give the biggest score boost? i will pay them all off when I complete new2nd mortgage/LOC, but need to do something to qualify first!

Thanks for any advice you can give me.

-Bump-

I have a similar situation and would like to hear from the experts.

We've had some fairly extensive experience dealing with this kind of situation.

First of all, the advice I'll give you is based on EQ's scoring model. EX and TU may be similar, but they won't be the same but when dealing with scoring we just concentrate on EQ and let the others do what they will.

Secondly, EQ has many scoring models. I cannot guarantee your results will be identical to ours, but the same principles have applied to both of our reports multiple times.

Recommendations -

Get ALL of your revolving lines BELOW 50%. Even if it's showing as 49%, that's good enough. 50% is the magic number and when the last goes below 50% we get a boost of around 20 points.

If you have other small revolving accounts, no matter how small, pay them off entirely. You want to have fewer than 5 revolving accounts with balances. This gave us a boost of around another 20 points. (and our last one to go to zero was $9 - every one matters.)

Make sure if you have a Cap 1 card or any other that doesn't report your credit limit, make sure that you're treating the high credit number that they do USE as the limit like it IS in fact the limit. In other words, get to below 50% of whatever it shows your limit to be, even if it is not the correct limit.

Do these things and you should get enough of a boost to do what you need to. Can't guarantee it, but I'd be very surprised if it didn't work for you just as it did for us. (We learned this by doing it.)

DemPooches

Thanks-- but just to make sure I understand -- does EACH account need to be below 50%, or the total debt to debt available? In otherwords, I can get the total below 50% more easily than each account, based on what i owe and the various credit limits. At least, i think this is true if I am doing my math right...

It is important to get EACH account to below 50%.

Why do they care? It makes no sense. It's just how the system works. We were stunned to see how some of the tiny little balances that were utterly insignificant to us became HUGE scoring factors because they were on gas cards or store accounts that had low credit limits.

The biggest shock though was when the $9 balance went to 0 on our Sears card (no other changes) and we gained 20 points.

Hope this helps.

DemPooches