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Hi all,
First time posting, like advise on which debt I should pay off first.
I have an unsecured loan at 25% APR with monthly payment of ~$600 and another unsecured loan at 7.04% with montly payment of $380
I"m debating if I should pay off the loan at 25% APR, or pay off my some of my CC.
My current credit score is around 715 and would like to increase the score.
I was thinking if I pay off the unsecure loan at 25%, that would allow me to have more money to apply towards my CC.
Not sure if thats the right decision.
@Anonymous wrote:Hi all,
First time posting, like advise on which debt I should pay off first.
I have an unsecured loan at 25% APR with monthly payment of ~$600 and another unsecured loan at 7.04% with montly payment of $380
I"m debating if I should pay off the loan at 25% APR, or pay off my some of my CC.
My current credit score is around 715 and would like to increase the score.
I was thinking if I pay off the unsecure loan at 25%, that would allow me to have more money to apply towards my CC.
Not sure if thats the right decision.
Welcome to the forums!
I would suggest always paying off the highest APR item first: that's probably your 25% loan. That's the fastest way out of debt honestly, and much as you suggest, start kicking that additional money towards the credit card balances which are likely in the 15-20% range.
Score-wise paying off an installment loan isn't like paying off credit cards though, possibly no benefit or even negative, but in most non-trivial cases I would suggest that money > FICO, and this is a pretty easy example of such.
Depeding on your income situation and how comfortable you are, meaning money left over for living, generally pay off the higher interest rate one first so you have more money left over when this is gone.