On the other hand once you are debt free do you really care that much about whether the credit score is 785 or 800?

First of all, your husband is very WRONG. Go ahead and lower your debt by as much as you can. No one is going to penalize you (including FICO) for not throwing your money away on interest. Even if you get them all to zero, you can still carry a month to month balance, which will show activity on your report. Besides, even if the banks don’t like you paying in full every month, they can’t tell that just by looking at your credit report. All it shows on there is that u have a balance; there’s no indication that you paid your previous month’s balance in full (at least none that I can see on there)… I buy EVERYTHING with credit cards, just so I get the miles, the cash-backs, the extended warranties, the travel insurance, the dispute rights, having the benefit of keeping my money for an extra two months, and so I can keep better track of what I spend every penny on. BUT, I ALWAYS pay the balance in FULL by the due date. Once you’re debt free, it is EXTREMELY important to pay them off at the end of the month. That way you get all the benefits and none of the pain.

Here are somethings you can do to increase your score -

-Pay down your debt. I use about 2% of my available credit, and I pay that off every month. About 3 years a go, I had 20k in credit card debt; the more I paid off, the higher my score went.

-Never ever close any of your oldest credit cards. The longer your open credit history, the better. I have about 15 cards.

-DO NOT open any new credit cards, unless they give you some outrageous rewards. For example, I just opened a Chase card that gave me 100,000 free miles. Opening that account, lowered my score by about 8 points, but getting two free trips to Europe was worth it.

-Every two to four months, call up your existing credit card companies and ask them to increase your limit (a lot of times, you can do this online). Most of them will consider it without putting a hard inquiry on your report. Be sure to ask them though; if they say they’ll put an inquiry on there, tell them to forget about it, and move on to the next card… While you’re at it, ask them to lower your interest rate as well, it doesn’t hurt to ask, and often, they’ll do it.

-Always pay on time – This one is obvious, but it’s very important.

-Check your report for any errors, if there are errors, dispute them immediately. Even if you have some legitimate past due accounts that are paid or in good standing now, you should call up the creditor to see if they’ll take them off. Often, they will if you insist. My sister had something like 7 old past due payments on her report, and once I had her call every one of them, I think at least 3 or 4 of them were removed. She had to talk to supervisors and make followup calls, and put some serious effort into it, but it was worth it.

Finally, to pay off your debt, the best thing you can do (if your score is high enough) is to find one or two of those zero interest cards and transfer your balances to them. They’re hard to come by these days, but even if you find one that gives you 9 months interest-free, that would make a HUMONGOUS difference. Just make sure that the transfer fee is no more than 3%.

Okay, this ran a bit longer than I was planning, but hopefully it helps, and good luck on your quest to becoming debt free

“debt partially is good” – Never stay in debt for the sake of “being in debt.” Unless you are using that debt for productive reasons (i.e. investing), then there is no reason to carry debt for the sake of it. But, building your emergency fund is a great reason to put off eliminating consumer debt altogether.

“30%” – It is true that having a 30% credit utilization rate will positively improve your credit score. It shows that you are able to handle the amount of credit you have, and it poses less risk to a potential lender.

Also, when your credit score is pulled, it is a snapshot in time. Lending institutions will not know whether you pay your credit card bill off at the end of the month or leave a balance. I think the myth of leaving a balance was started by the credit card companies…Save the money you otherwise would have paid towards the interest, and put it in your savings account. Doing this may also help your credit score, lowering your utilization ratio.

I think you have the right idea. Start up your emergency fund (3-6 months of expenses). Once established, start the snowball rolling in paying off your credit card debt. Pay more on your student loans last since at least some of the interest is tax deductible. On your credit cards, attack the card that affects your cashflow the most. Once that card is paid off, roll that payment to the next credit card, creating your snowball effect. But don’t close any of your credit cards. That will have an adverse affect on your credit score.

If there is still debate between you and your hubby, do some more research individually and compare. I wish you the best in buying your home.

You want an emergency fund and he wants the 30% balance. Make an agreement with each other that you both create the emergency fund first (you’re happy) and then focus on one of his unsecured debts, like his credit cards, until you get to his 30% balance (he’s happy). Now go back to your consumer debt and make one of them a zero balance (your happy) and then go after his next unsecured debt to a 30% balance (he’s happy). Give going back and forth until you get to the level you both want. I have a feeling that when you show him that you were paying X amount of dollars to debt and now have that in your pocket, he will want to have a zero balance as well. Like the reader above, the numbers will show him everything. Just my two cents…

The reader’s husband sounds analytical so I would definately do the math and look at the interest and time it would take to pay off debt. Having the numbers in front of him may cause a change of heart.