Which should I pay off first?

[Anonymous]

I am in a position to pay off some credit card debt finally, but do not know which one to do. 

I have 1 closed credit card with a balance of $6000, and 2 open cards with balances of $5000.  Will my FICO score increase more by paying off the open ones first?  I only have enough $ to pay one or the other, but not both.  Thanks!

[Anonymous]

I would pay off the closed account as the CL from that card is no longer calculated in your available credit, so it looks like you are maxed out on that card.  If you can get that one paid off, then it should help some and then you can work on the open accounts.  I'm not sure from your post, how much available credit you have in comparison to how much you are using.  If you list your accounts, that would be helpful.

[Anonymous]

The closed account is killing your FICO and is a bad mark on your CR.  Lender's would not like seeing a closed account with $6k balance.

Your utilization adds up all balances then divides against the CL's.  Since your $6k balance has zero CL, you are really taking a hit.

However, you must also look at the financial side.  If the $6k is at a really low APR and the open accounts are really high APR's, then you may want to think about paying the higher APR's in order to save on the interest.

There is the chance that your open accounts, if they soft pull your credit and see a closed account with balance could take Adverse Action and cut your CL (chase balance) or even close your account.  So, from a credit standpoint, you need to kill the closed account balance. 

If you do not have enough money to pay off the $6k, then you could pay what you can and BT the difference to open accounts.....but that also could cause your open accounts to "review" your account and credit to see what your credit looks like, and if they see you are BT from a closed account with balance and increasing your balance on opens, they may interpret as financial problems.  Therefore, paying the closed account off without BT is your safest bet from AA from open accounts.

Be sure you are paying much more than minimums (5x or more) on open accounts if you can, or PIF if possible.

[favor4me2]

Hi txjohn, I have a question for you that I know you can answer. I have a hooters card since 07 at the time the limit was 1000 with automatic cli's it is now 1800. I called in September 08 to inquire about a cli and the csr stated that they were not giving them at that time. Every 4-6 months they have automatically increased it since I had it. I told the lady to close my account then if I couldn't get an increase and she promptly did. In the past this would work in order to get transfered to the retention dept, but I guess I called when they wanted to close accounts anyway. She closed the account so fast I did not have time to tell her not to. The account was maxed out. She informed me that even though the account was closed, it would not stop the interest charges, so I thought that was a good way to get the account back open without sounding foolish, so I told her if it wasn't going to stop anything then open it back up (since my plan didn't work anyway). The problem is she opened it right back up but every since then it has been showing closed on my cr's I have called Hooters and everytime, they say they don't know what the problem is because it is showing open on their end. Now the funny thing is, that I still get cli's on this card automatically every 4-6 months but on the cr's it is showing closed at customer request and it shows a balance. I have since paid down all but 600. They told me to send in a copy of the reports that are saying closed and they will dispute it with the cra's. I'm afraid to do this because I don't know if that will cause it to be deleted or not, and the other question that I have is, when I pay this off next month will I loose my card all together? Sorry for the long letter but I wanted to explain the whole thing to you. Thanks for any advice you may be able to give me. Oh and by the way I have no AF on this card and it is one of the oldest ones that I have re-established since bk in 05. I asked these questions because you stated in your other post that a closed account with a balance is killing your scores. My scores are Eq 674 Tu 692.

[Anonymous]

When you play poker and bluff, sometimes your hand gets called

1.  Have you used your card since it was closed and then re-opened?  If you have used it and charges are authorized, then it would appear that the card is in fact open.  You need to make sure the card is open and working.  You have CSR confirmation, but you want to make a couple charges for gas, etc. just to make sure and to exercise it.

2.  Depending on when you closed the account, it can take from 30-90 days for the account status to update on your CR's.  So, if you have determined the card is open (charges do authorize and pay), then I suggest filing an online dispute with the CRA's since it is not currently reporting accurately.  The CRA's will take up to 30 days, but it should come back updated and corrected at that time.

3.  If you are worried they may close the account, keep a small balance, use it regulary for day to day expenses, pay on time the majority of balance.  If they keep authorizing charges and you keep paying and you are getting CLI's, then you really shouldn't have anything to worry about.

4.  Learn this lesson, that you must be prepared to have them act upon your request of closure.  Retention will only apply if they are aggressively seeking out new accounts and keeping accounts.  But whether they keep it open or close it, you still will be liable for payments including interest.

5.  From reading many Hooters posts, I don't think this is ever going to be a really big CL.  At some point, you will have to diversify and seek other credit for larger CL's.  So, manage this one well, take the auto CLI's.  Ask occassionally (1x - 2x yearly) for a CLI (possibly use recon if declined) but don't get "emotional" about the results.  We almost never make good decisions when acting emotionally

Good luck and make sure you are putting some savings aside in addition to paying debt - you'll never regret that decision later

[favor4me2]

Thank you txjohn for your aways STELLAR advice. Yes I have used the card often, I have never had a problem with being able to charge anything and the auto increases have never stopped. It just says closed on my credit reports and the csr said it would take 30-60 days for it to update, but it has been 7 months. I'm just wondering if the account is hurting my score by being reported as closed with a balance?

Message Edited by favor4me2 on 04-13-2009 08:20 PM