Credit report results and a question...

How much total debt do you have between you, and how much of your monthly take-home income goes to debt payments? Are any of these accounts joint accounts, or do you have $64K debt between you?

If you're in good standing with all your accounts, and you are able to continue to cover your payments and make progress on paying down the debt, I doubt that credit counselling will do anything but trash your scores and cause some of your creditors to jack your rates and lower your limits, further scaring the rest.

If you are able to do so, you are better off cutting your spending, and paying off your debt as efficiently as you can. If you can get your debt down, in a couple years you will have a solid positive credit history with now older accounts and higher limits, which will result in good credit scores and better terms.

Whether debt consolidation is any help depends on the rates and fees, compared to what you are already paying.

What are your account balance amounts and interest rates?

 

From personal experience I would agree with ontrack.

Because you are not in any real trouble it is best to simply just keep trying to make head way.

Create a plan to knock out the credit cards with the highest interest but the lowest balances. Then simply reduce the other cards to the minimum payment and take that surplus and apply to the card with the lowest balance and highest interest.

I think this would help you to get out of debt faster. I am personally leary of using debt consolidation services. I would much rather take out a second on my house than use a DC service.

Just my opinion!

 

Yep.. stay away from these folks and do it yourself. I called once myself.. they take the control away from you, but as long as you are handling it you are okay. As explained do a "snowball".. that is pay the minimum payments on all BUT the one account w/the highest interest rate/lowest balance. Once that one is paid off.. move on to the next.

 

I would stay away from the Credit Counciling. I sell real estate so I deal with Mortgages a lot. Most of the Morgage companies I work with treat CCCS almost the same as having a Bankruptcy on your report. If you are planning on buying a house you might qualify for 100% financing. There may be a chance that it might be better to pay off some of those debts and reduce your debt to income ratio. If you are pretty serious about buying I would talk to a morgage broker and ask them what your better option is.

Good Luck,
Aimee

 

What matters is not just being approved, but being able to cover both any current debt, and any new debt due to a mortgage, out of your monthly cash flow.

How rapidly is your debt being paid down? If it is not decreasing at a monthly rate higher than a mortgage payment would be higher than your current rent, then you are in no position to take on a mortgage. Prepare a budget, and run the numbers.

 

The inquiry will depress your scores some for a few months, more so if your debt to available credit is high, but if your are not actually taking on additional debt, your total debt to available credit ratio will drop on adding the new account. After a year paying on it (on time), if your debt has not gone up, your scores may actually increase as all your open accounts age.

If you have a long credit history with all positive "paid as agreed", your current debt to available credit is not too high, and you have not opened other accounts in the last year or so, opening an additional account with no total increase in debt should have only a minor temporary effect on your scores.

Since FICO scores each of your reports separately, for each of you, what total available credit do you have, and how much of that is outstanding debt?

 

The inquiries will all show, but the FICO scoring will merge them if they are for auto loans or mortgages and occurr within certain periods.

Since this is for a CC account, they will probably have a cumulative effect on your FICO scores.

Your scores appear decent, but you wouldn't want to trash them with excessive inquiries, which might spook your existing creditors. You are, however, carrying a lot of debt, so you might over time shift it to better terms to help pay it off faster. In addition, amounts transferred on balance transfer terms at fixed rates are more likely to stay at those rates than any purchase balances you may be carrying, which are probably at higher rates anyway.

If your existing accounts are quite a few years old, opening one account a year should have a minor effect on your average account age. Do not close accounts, as that will affect both your average account age, and your debt to available credit ratio. Do not open store accounts, as their rates will be high, their credit limits low, they are likely of limited use, and their inquiry depresses your scores as much as a more useful VISA or MC.

Be careful who you establish new accounts with. Check them out before applying. Diversify.

Your debt to available credit ratio is the main thing you are trying to improve. Are all your accounts independent, with no joint accounts (safest)? For each of you, what is your total available credit?

What sort of offers are you getting in the mail?

 

cherie has the right idea, but don't worry about the balance, worry only about the rate. If you aren't going to buy a house or car within the next year, I personally wouldn't worry so much about the score, especially if it's inquiries. Your score will rebound from getting the utilization down.

What I did was make a spreadsheet with each card, the balance, the interest rate, and the minimum due. Sort by interest rate, descending order. That gives you the highest interest rate at the top.

Take the difference between what you have available to pay on the accounts and the total of the minimums. Add that amount to the minimum on the top line. Now you have your payment schedule--minimum on everything but the highest interest, then the rest on the highest. Check it every month or so--your rates may change, especially if it's a variable rate card. Whatever is the highest rate gets the extra money.

When the highest rate card is paid off, whatever you were paying on that gets added to the minimum for the next highest (which you can still compute by taking all the minimums, subtracting from your available funds, and adding the remainder to the highest interest).

I put in the balance only to do a total. Each month you watch the total go down. Don't worry about individual balances. When they get to zero, take them off.

Don't close the cards. Keep them open, and use each one every few months for something like gas or groceries that you would pay cash for. As soon as the bill comes, pay it. That way you won't pay any interest on that card, but you'll keep it active, which means it counts as available credit in computing your ratios.

 

That is similar to what I do.

In addition, once a week, I call each CC company and get the current balance at that point via their automated systems. I can then create a mini-balance sheet showing current CC debt, upcoming bills, and current bank balance.

If I project out to my next paycheck at the end of the week, I also project out to all bills (utilities, rent, everything I expect, whether I have received the bill yet or not) that have to be payed with it, until the following paycheck. The total debt including upcoming bills less my cash is my net short-term debt, which I track week by week. This in effect puts my thinking on an acrual basis.

I think of it as a game with a score. I want it to go down, monotonically.

I don't like to be fooled thinking I have more than I do, as the debt builds up until the statements come in.

 

Here is a great idea...

Call your credit card companies with the highest interest rates and tell them that you would like a 10 day pay off.

What should happen next is they should ask you why you are paying off your credit card.

Then you could tell them that you are considering transferring your balance to another card at a better interest rate.

If they are smart they should start to inquire about the rate and terms. Simply answer their questions and see if they try to match it or come close.

Alternatively...

You could simply take the direct approach and simply ask them if they have a lower interest rate for your current balance. (This method doesn't work as often as the previous one, but you can give it a shot)

At least one of these two methods could lead to better interest rates on a couple of your cards and then you could transfer your remaining high interest rate cards to offers that you have received.

 

now might be a good time to consider buying a home since interest rates ares starting to rise.
also a house vs a car.
the house will appreciate in value
the car loses money the second you drive it off the lot.
if you have a dependable older vehicle, it makes more sense to either take that money that you would have spent on a car payment on cc debt, or buying a home.
you will definitely get out of debt faster.

definitely call all of your credit card companies and try to get lower rates, also see if any companies offer low rates on balance transfers.

good luck

 

Depending on your local conditions, home prices may not be appreciating as rapidly as they have in the recent past, due to higher interest rates and squeezing out buyers who intended to use ARMs and other loans tied to short term rates to qualify. These interest rates have yet to filter thru the housing market, where they may depress or contain prices, even though they have probably directly affected what you pay on your CC debt.

$64K is a lot of CC debt. How much of your monthly takehome pay are you spending on servicing CC debt?

 

right on ontrack,
every local real estate market is different.

also if you are planning to move and have a reduction in your rent,
lying low and paying off cc debt is a great idea.
you seem to have a good master plan.

my thought was that why buy a new car in your situation if you have dependable transportation, and are so heavily in debt.
drive that beater until the wheels fall off. (although with gas prices the way they are, it might not be a bad idea to buy a newer fuel efficient vehicle)

dump all of your available income into bringing down that debt, and when you are ready, work on buying a chunk of mother earth.

when you finally settle down in the city you want to live, it isn't a bad idea to have that nest egg to put towards a down payment on a house, which will bring down your mortgage considerably.




great points on this topic everybody!