Pay cc's off vs. On Time ~ which will raise your credit rating higher?

[Anonymous]

I only have 2 credit cards and the balance on those together are less than $1k but my credit is low b/c I have a history of not making my payments on time.  I am now in the position to where I can afford to get things on the right track and start making my payments on time.  Would it be better to just pay them off in full or should I set up an automatic payment every month on these cards?  Any assistance would be greatly appreciated.

[pmarti8]

From what I know of the FICO scoring it weighs heavily how you handle your revolving debt , credit cards.  How close to the limit are you on the two cards? Nothing but time and a history of on time payments will fix the late payments but if you want to immediately help your score and your cards are close to the limit pay them down and leave a very little balance.  Lower the utilization to under 30% will definitely help your score.  If you can lower it to under 15% even better.

Charge no more than 10% of the limit each month and pay it in full.  Not only will this save you money in interest but if you continue to make on time payments for a year you should see you effect of those late payments diminish.  You can even try goodwilling the CC company to remove the late remarks.  Good luck.

[MBOhio2]

30% of your credit score is CC utilization % and 35% is payment history.

As the previous poster said, paying off your cards (pay all off, except leave one with less than 9%) will give you a large and immediate boost. Some people who have had close to 100% util have seen as much as 100-120 point increase, but that varies for each person based on your individual credit profile.

Unfortunately, the 35% that's based on payment history takes time ot improve. Making all payments on time slowly, will give you small increases over time, but they will be very gradual.

[guiness56]

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@Anonymous wrote:

I only have 2 credit cards and the balance on those together are less than $1k but my credit is low b/c I have a history of not making my payments on time.  I am now in the position to where I can afford to get things on the right track and start making my payments on time.  Would it be better to just pay them off in full or should I set up an automatic payment every month on these cards?  Any assistance would be greatly appreciated.

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For the quickest score increase, paying them down all at once would work best.  Then leave one at 0 and let the other report a 9% balance or less.