Just note that I am writing to address the score questions, not commenting on finances. From experience, the most penal score penalties are for COs with an unpaid balance that are reporting monthly. Not only are these the worst derogs you can have score wise (besides a BK), they are counted against your utilization. Think of every unpaid CO counting as an account over the limit. Any utilization changes you make on your active accounts barely make a dent, you can practically pay off all your open/active accounts and you'll still have super high utilization score wise because of the unpaid COs. Additionally, COs won't start to "heal" until they are settled/paid off. Note, that you don't need to pay them off, you could negotiate a settlement with the creditor for less than the balance. You'll get a comment on the account that you settled for less, but the algorithms don't read comments and your scores will finally start to improve when the past due balances hit $0.
@bourgogne wrote:URGENT: UTILIZATION vs LATES vs COs
97% $17K BALANCE – 573 FICO 8 EXPERIAN – 6 REVOLVING ACCOUNTS
What is hurting the scores the most? If the consumers utilization goes to 1% what could the impact be?
OPEN TO ALL COMMENTS / SUGGESTIONS RELATING TO THIS SITUATION – LET IT RIP
Some background
Consumer’s car has been totaled (consumer not at fault, thankfully) $10K owing which we be paid to $25 this Friday (my funds)
A check from the insurance company will be cut for $18K that will go to the consumer, lienholder gets $25
* my initial plan was to hook a new ax biz blue plus (0% for a year ) onto plastiq and do a 2.9% payment for the car pay off, but one cannot pay loans down with ax. the money I am lending the consumer is $10K from one of my LOCs at 14%.
** my next step was to pay all cards down to $0, sans a single account with a $10 bal. let the 6 accounts report and have the scores go up for the consumer to better quality for a car.
*** my question is how much will her scores potentially go up? not sure the total impact of the lates or the (3) COs which all have high balances. (the consumer did not negotiate the bal down and has been paying them down for over a year, another major bad move)
Unfortunately, the consumer picked the wrong lenders to burn, the car, the home and chase.
Burning the home with 22 lates means the only loans the consumer can get will be nuclear with a huge origination fee and high interest - nobody will give the consumer a second or heloc for at least a year of clean history. the consumer is 3 months behind ($2500/month) the consumer has been late this entire year; the consumer will pay it to 2 months late on Monday
Ditto with the car loan, 14 lates, 2x in 2024. the consumers only option is to get something from KIA again, will probably just replace the SOUL as the consumer likes it
10 reporting accounts, 9 late
2 CAP1
1 CAP1
1 CAP1
1 CAP1
14 KIA
22 MORTGAGE
12 CO DISCOVER
23 CO CHASE
23 CO CHASE
99 LATES
Is your question whether 97% utilization is hurting more than 99 lates? The answer is no, 99 lates hurts worse. But since there's very little you can do about the lates, and there is something you can do about the utilization, you might as well tackle the utilization.
If any, or all of the COs were revolving accounts, as stated above, these will have the biggest negative impact to her scores due to them being scored (in addition to a serious delinquency) as maxed out accounts until they show a zero balance. Getting the UTI down across the board is important. Not much you can do with all the late payments except getting the accounts current (if they're not), and allowing time to do it's thing.
