Paying off credit cards

[Anonymous]

One of the negative factors on my CR says too many open accounts with balances. That being said, I have several higher CL cards carrying a balance where my APR has been raised.. Would I be better served paying off 7-8 smaller balances (none over $700) bringing them down to 0, or should I pay off the higher cards where I will only knock out 2-3 accounts? Just wondering which will help my score the most. Less accounts or less util%.

[haulingthescoreup]

Which is listed first in the negatives, high util, or too many accounts?

If you're paying the same amount of money, whether to the high balance cards or to the little ones, your total util won't change. It doesn't matter how many accounts your amount owed is on; it's just that total figure of amount owed. So unless you would somehow pay off more money under one option, that's a moot point.

If so, then your best scoring option is to knock off the balances on your small cards, getting them to report $0. In the meantime, don't let your balances climb on the other cards, of course, with the ultimate goal of getting them all paid off.

In terms of financial benefit, your best bet is to pay off the higher APR cards first.

[smallfry]

My guess is high utilization will hurt more than too many accounts with balances.

[Anonymous]

high utilization is listed first. To be more specific I have 19 C.C. now carrying a balance. Highest balance is 3150. I can either pay off 7-8 bringing me down to 11-12. Or I can pay off 3 higher ones and I'll be sitting at 16.

Message Edited by Chris_1970 on 06-06-2009 07:06 AM

[haulingthescoreup]

Again, if you're talking about having exactly the same amount of money available to pay on cards, let's say $5,000, it won't affect your total util whether you pay off 2-3 or 7-8. The remaining total amount owed and total credit limits remains the same, so total util won't change.

Do you have a comment about an individual card having high util? if so, then maybe paying that card down/ off would help.

But overall, with the same amount of money available for payment, I think your best bet for scoring purposes would be to knock off multiple small cards. Then go after the biggies.

[marty56]

IMHO I would forget the scores right now and focus on getting out of debt.  To that end you would make minimum payments on all but the account with the smallest balance and attack that one first and then the next smallest and so on - the so-called debt snowball approach.

These days, with CDs and other AA all the rage, they only safe way to protect your score is not to revolve any CC debt.  I know that may be hard to do and believe me I've been there.