Paying Off Credit Cards

[edzy 10+ year member]

Wrong all around. You pay them off and they will probably have their credit limit decreased, or the account closed. Banks are trying to cut back on credit limits. So don't count on having that credit for a buffer.
A 10k credit limit is not looked at as a 10k debt. Read up on utilization for fico scores

Sears was one of the first to do that. If you had say a 2k limit, and it was paid off, they would drop it to $500

So what does this tell you?

 

[Flipx99 5,000+ posts]

my I ask how you accrued so much CC debt? You both may deserve a smack in the mouch for racking up such a debt..

Hey now.

I have about that much debt. But it's all at no interest. The solution to OP's question depends on whether or not he is paying interest.

 

[duece212 5,000+ posts]

Sears was one of the first to do that. If you had say a 2k limit, and it was paid off, they would drop it to $500
So what does this tell you?

So are you trying to show the CLD that I advised would happen if they pay off the card, or are you trying to show a high debt to credit ratio (running up your credit cards) hurts your credit like I was saying?

 

[edzy 10+ year member]

well, in that example, the Morgage is the highest debt. 96%

Installment...Car loan. 74%

Revolving . And that is what the subject was on. So a low 58% is good.

idk what your asking...

 

[squeak9798 5,000+ posts]

With your credit score, it isn't necessarily damaging to have a high limit available (as Brad alluded to, it improves your ratio of debt vs available credit). However, when you go through your application, one of the things most banks calculate is your Total Debt Service Ratio, where they compare how much you make per month vs what you have to pay off in debt. The debt they calculate is the maximum debt you could be in to ensure that you're still able to make your payments, so in that situation having a high credit limit available to you could cause your TDSR to be too high (here in Canada, 40% is too high for most loans and mortgages).
Pay off your credit cards. Leave them open in case an emergency comes up. If you need to apply for some other form of credit, cancel them before you do.

Of the companies I've worked for, none of them (and none that I know of locally) take potential payments on unused or underused lines of credit into account for DTI calculations.

Obviously a manual review of the credit file and application will provide a more in-depth overview of the customers trends and situation.....If someone has 4 maxed credit cards and just opened 3 more will I be a little more cautious? Yes. But I've not seen anyone, in my area or companies I've worked for, explicitly include this in DTI analysis.

Ask a finacial person.

//content.invisioncic.com/y282845/emoticons/laugh.gif.48439b2acf2cfca21620f01e7f77d1e4.gif

I approved a couple loans today. Yourself? //content.invisioncic.com/y282845/emoticons/wink.gif.608e3ea05f1a9f98611af0861652f8fb.gif

So they include that in figuring out how much to lend, if you had to pay the new loan and the 10k credit card. It can lower your borrowing ability.

See above.

 

[squeak9798 5,000+ posts]

Guys, it's about more than just FICO scores. For us banks, that number is a starting point (ie. you must have at least this to be considered for a loan, and this for a line of credit). Once you meet that criteria, we go through other adjudication parts like employment history and we calculate your TDSR.

"us"

"we"

When did you start working in the industry?

 

[bigaudiofanati2 10+ year member]

I actually am in the same boat as you are. I have talked to a credit counselor and someone who helps set budgets and both have told me that it is better to pay your payment on time rather than paying it all at once.

 

[Flipx99 5,000+ posts]

I actually am in the same boat as you are. I have talked to a credit counselor and someone who helps set budgets and both have told me that it is better to pay your payment on time rather than paying it all at once.

They both should be shot in the head. Why are they telling you to pay more interest versus less?

 

[nickolas_j_t 10+ year member]

let it go. tax payers like you will end up paying for it.

 

[newusername 10+ year member]

"us"
"we"

When did you start working in the industry?

Just under a year ago. And I have US banking contacts that I speak to.

 

[squeak9798 5,000+ posts]

I actually am in the same boat as you are. I have talked to a credit counselor and someone who helps set budgets and both have told me that it is better to pay your payment on time rather than paying it all at once.

For building or rebuilding credit, yes.

To get out from under 20%+ interest and beginning fiscal responsibility by paying off $7500 in revolving debt, no.

 

[squeak9798 5,000+ posts]

Just under a year ago. And I have US banking contacts that I speak to.

Interesting. Wasn't aware of that.

If you have any US banking contacts who give you any tips on position openings, drop me a line //content.invisioncic.com/y282845/emoticons/wink.gif.608e3ea05f1a9f98611af0861652f8fb.gif//content.invisioncic.com/y282845/emoticons/biggrin.gif.d71a5d36fcbab170f2364c9f2e3946cb.gif

 

[Flipx99 5,000+ posts]

For building or rebuilding credit, yes.
To get out from under 20% interest and beginning fiscal responsibility by paying off $7500 in revolving debt, no.

Still questionable IMO.

I built my credit on revolving credit without paying interest...

I pay interest on my house...but I try to escape it when I can.

And if you save enough cash, you don't need credit.

 

[duece212 5,000+ posts]

For building or rebuilding credit, yes.
To get out from under 20% interest and beginning fiscal responsibility by paying off $7500 in revolving debt, no.

Indeed and especially if you have no need (not want) for credit its dumb to pay a shit ton of interest just to try to rebuild your fico score. Having low utilization will probably do more for your credit than keeping a balance just so you can pay on it monthly.

 

[bigaudiofanati2 10+ year member]

They both should be shot in the head. Why are they telling you to pay more interest versus less?

They say pay more than the minimal like if 50 is wanted pay 90 and that way the interest wont build.