All, I am at the point where I have a limited line of credit and I am considering which action would have better impact on my credit score. Action Option 1: - Reduce Installment Loans - Automobile loans - Deferred Student Loans (Don't think deferred student loans make a FICO score impact but on the Creditmanager.com it appears it does) Action Option 2: - Reduce Credit Cards amounts Thanks in advance. -Gavenraj
Forget credit scores and put money in your pocket. Pay off {or down} whoever is charging you the highest interest rate.
Whenever I have paid down my cc balances, I have gotten substantial score increases. But, I also paid from about 70% available to 92% available. My score increased by 30 some pts. When I had a private student loan deleted from Equifax, my score jumped by 50 pts. If you can pay an installment off, maybe that would be the way to go. But, if you can't, then pay down the cc's.
So paying off an automobile loan would be a higher priority than say a Mastercard? Thanks in advance. -Gavenraj
My student loans are deferred, that is why I am asking. I forgot to state this in the previous response.
I can't guarantee that. It's just how it worked for me. If you have several cc's that you can zero out, maybe 3 cc's at zero is better than 1 car loan at 0. I don't know. It's a tough call. It also depends on what type of interest each has. There is a lot that goes into this. If you like, why don't you post each acct, the amount and interest. It may make advising a little easier.
Student Loans (All deferred to at least 6-2004) ---------------- *Student Loans, which are deferred do not get counted on real estate loans as long as they are deferred for 1 year from date of the loan* 1) $15,062 (3.4%) 2) $10,000 (3.4%) 3) $ 8,849 (3.4%) 4) $ 8,500 (3.4%) 5) $ 8,500 (3.4%) Automobile Loans -------------------- 1) $18,700 (9.5%) 2) $14,300 (9.5%) Credit Cards -------------- 1) $ 7,851 (15.9%) 2) $ 5,808 (2.9%) --> Lower the Line of credit I will paying off anything. Thanks, Gavenraj
Personally I would work on that 15+% CC or the one where you owe less money. Just my opinion though. I would NOT pay off deferred loans b/c they're not looking for payments. The other creditors are though. In my experiance an open auto installment loan w/ a balance owed has actually been good for my credit score.
I'd be interested to hear others comment on Mandy's last comment about the auto loans. I was considering paying them off. If I pay them off, will that reduce my credit score? Just doesn't make sense. -Gavenraj
If you can completely pay off the auto loans, I would definitely go for that. Mortgagees don't just look at the score, they look at debt to income ratio. So if your car loans are taking more of your monthly take home than your ccs, I would go that route. You could have an FICO of 750, but with debt to income ratio high, that is another reason they can not approve you.
