jke wrote:
Hi. I have a lot of large balances on my credit report. I have six cards with balances close to the limits. I have a little money to pay down the cards but not to pay them all off. Is it better to pay one card off completely or to pay down the balances somewhat on all the cards. My utilization is well over 50% on all of the cards. I did a lot of balance transfers and did not know that maxing out the cards affected your fico scores. My scores dropped to the low 600's and now I cannot get a CL large enough to significantly transfer any of the balances to a new card. There is absolutely no way I can get enough money to pay them all down anytime soon.
What do you think I should do?
There are two answers to this question, depending on your priorities.
If you want to pay your debt off as quickly as possible and pay as little interest as possible, make the minimum payments on all your cards, then put any additional money toward the one with the highest APR. Once that one is paid off, move on to the one with the next highest APR, and so on.
If, on the other hand, your goal is to improve you FICO scores, then it gets a little more complicated, but your priorities for payments should generally be something like this, and in this order:
1) Pay all cards below 80%.
2) Pay all cards below 50%.
3) Pay half of your cards in full.
4) Pay the rest of your cards to 1-9%.
If you wouldn't mind posting your cards along with their limits, balances, APRs, and how much money you plan to apply to payments, we can give more specific answers.
Message Edited by cheddar on
02-09-2008 12:42 AM
