credit card debt (pay, transfer, credit report, accounts)

[Sprawling_Homeowner]

OK, here's the deal.

I have about 2700 in a 0% APR card.

I pay off my 2 other cards in full monthly, but in May and June I had larger than average expenses (plane ticket, family gifts, storage company fees, truck rental).

These two cards' amounts are currently totalling 3000 dollars. I have two options.

1. bite the bullet and pay them off when they are due (around July 15)
2. transfer them and the 2700 from the other card into a new 0% APR card.

Now here's the worry I have.

Around July 20th, I will formally submit my application to the coop board (I am buying a coop; contract's been signed, so this is the final step before the closing). They will run a credit report. My Credit score is around 760 (790 or so for equifax). If I open a new credit card account this will probably lower my score. Could this be dangerous?

Second, if I transfer those balances rather than paying them off in about 1 week, I will have a total credit card debt load of 5700. This when I am yet to pay fees to my lawyer, to my mortgage broker, and $850 in non-refundable application fees to the co-op board (part of the process).

And, there's the costs in August for a truck rental and a second month of storage fees, which run about 240 a month.

So... should I bite the bullet and keep credit card debt low, or should I 'save' money now by paying 0% APR over time? (Keep in mind that 2700 account was over 4000 about 2 years ago and I've been paying it off steadily with the goal of having no credit card debt)

[mrsengle]

I don't think it's a good idea to open a new CC account - the credit bureaus don't like to see revolving credit, and that will lower your score. Also, opening a new card account may affect your score because you don't have any history with that card.

I think you should pay down at least half of your debt, and leave yourself some wiggle room for your anticipated closing costs. $2850 in CC debt isn't horrible, but it does depend on how much available credit you have. If you have a total of $30K in available credit, and you're only carrying $2800, you should be fine. If you only have $10K in available credit, that's another story. I'm assuming that your credit score as of now(after your May/June expenditures) is 760-790, so your debt-to-credit limit ratio is already figured in - again, I think you'll be fine, IF that's the case. If your score is several months old, check it again.

I also want to mention that the types of cards you have can make a difference in your debt-to-credit limit ratio. Some cards do not report your credit line to the bureaus - only your balance and payment history. Capital One does this. For example, if you have a $10K credit limit with Capital One, and you're carrying a balance of $2700 on that card, they report that $2700 to the credit bureaus, but don't mention that you have a $10K limit. So, your card looks maxed out to the bureaus. They can't assume any wiggle room when calculating your credit score, so you can wind up with a lower number. If you're carrying debt on a card that does this, I would, at the very least, pay that one off.

Please note: this is some quickie advice! Hopefully someone will chime in here that knows more about this

[christina0001]

I also don't think it's a good idea to open a new credit account right now. Normally I would encourage you to pay the balance in full if you are able to, but being that you are about to purchase a new home, you may want to keep a little extra cash on hand. So I will agree with the previous poster's suggestion of paying 1/2 of the balance off, and keeping extra cash on hand for unexpected closing and moving costs.

Be careful you don't purchase things for your new home that aren't absolutely necessary, unless your debt is completely paid off and you can afford to pay in full for the items immediately.

[TimtheGuy]

With your high scores, opening a new account and/or moving a little debt around is not going to do jack to your credit. Unless your scores are artificially high with a limited credit history (eg. you only have one tradeline that has been open for a year and a half, never late, no dergoatories and somehow got a score that high).

[AZMonsoon]

I agree with TIMTHEGUY....

A good source to understand credit is bankrate.com which has the myths and facts on credit.

[FLPL75]

Personally unless the "0" apr card goes to a very high apr I would do nothing until after you are in the Condo. At this point you will know exactly the amount of cash you have on hand.
Any new activity takes between 30 & 45 days to report on your credit report. It depend on how often the credit Card companies send in the "tapes" to the credit bureau.
Most mortgage companies pull a final credit report right before closing is scheduled and you would not want to take the chance that the new card that you will transfer the balances to and the old card your transferring the balances from will both show the same money. you could in effect appear to have double the outstanding credit. The few dollars of interest you will be paying on the "0" apr card is much better than risking this.
Thats why they tell people do not open new accounts or go out and buy furniture or appliances or even a new car before you close on the new house.
I have actually seen people do this.
As far as credit scores anything over 720 just gives you bragging rights. It won't get you any better rate. I love the look on bankers faces when they see scores of 740+.

karla

p.s. I agree with AZMonsoon I love Bankrate.com it really has good advise on credit.