Snowballing - and raising credit limits

[Denvergirlie]

I am in the process of snowballing my debt.

I have 2 cc's and a truck loan

credit card #1 - all time high balance of $11K, with credit limit of $5K (long story how I was 6K over limit). Current balance is $3,330 but it will all be paid off before the end of August.

credit card #2 - all time high balance of $16K, with a former credit limit of $15K. Balance is now just under $11K and will be aggresively sending about $1300 to it a month starting in Septemeber 2007 until it's gone in 2008. This account is closed, closed by creditor.

truck loan - about $8K left to pay, lowest of all interest rates so this will be attacked once both credit cards are gone.

On track to be debt free before December of 2008. A long time away but also not that long away.

Currently am a renter, but will be looking into purchasing in the next year. Nothing fancy, actually looking for something a bit run down, really have no desire to have a mortage payment over $1K a month.

So here is my question.... once credit card #1 is paid off at the end of August, do I request a credit increase to show that I have more credit to debit ratio? Or would this be bad seeing that I do have a closed account, even thou it also shows that I haven't missed a payment in 2.5 years?

i do have two other cc but they are both low limits, like $500 each and are both paid off. In fact I totally forgot about them when I started this post. I do not use them, just keep them open for the time being as an emergency, emergency fund (I have $2K EF set aside in ING).

Well let me have it.... want to look as good as possible on paper to a prospective mortage lender but also don't want to do anything drastic to my creidt report. Last time I checked my credit score (6 months ago?) it was 689, I have thus since paid off about $4K on that cc#1 and only expect to climb above 700 once cc #1 is gone in the next 20 days or so.

Wow, that was long... look forward to any responses.

thanks

[disneysteve]

Your credit utilization ratio improves by you paying off your debt. There is no reason to increase your credit limit. In fact, if you want to buy a home in the near future, you don't really want to have more open credit available to you.

And, of course, from now on, you will never charge anything that you can't pay in full when the bill comes at the end of the month.

[Dave Rowtree]

Your credit score will have taken a beating from your going over the limit and any missed/late payments you may have had. The only of getting this back up will be not missing any payments and waiting. You don't mention when you were over the limit or if you missed any payments but this would be a big factor in your credit score when applying for a mortgage.

[mekish]

your priority should really be paying off the closed account first cause thats the one that reflects badly on you.

[buzz]

One of the problems with snowballing is that, while your overall utilization is decreasing, you still have nearly 75% on card #2. That is a score-killer. I would not be surprised if it hurt your chances for a CLI on card #1.

It might be a better idea to focus on paying down debt. While a higher limit may boost your score a bit, it may not be viewed favorably by a mortgage lender.