To sum it up very short, I have $1000 which I am going to use to pay off my bad accounts. My question is which one should I pay off to have the best immediate impact on my credit? I have a closed Bank of America credit card with a $3,000 balance; and TWO First Premier Bank Cards which are charged off as bad debt, with a $500 balance each. How should I allocate the $1000?
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Simple question, but unfortunately, not a simple answer.
You apparently have three closed accounts showing balances.
My initial opinion is that the real issue now is not so much improving current credit score, but more one of avoiding more future harm.
I dont know the exact status of each account, but if the BOA account is closed with a balance, it might progress to a charge-off, or a collection, or even legal action.
The two 1st Prem accounts have already progressed to charge-off, which might mean referral to a debt collector, and thus posting of a CA to your CR may be looming. Or maybe legal action.
So, my advice, before you do anything else, is to identify two things. The current reporting of delinquenices under each account, and the statute of limitations (SOL) on the debt of each.
From your credit report, what are the exact dates of each monthly reported delinquency on each account before they were closed or charged-offf?
These dates are critical in determining how long each will remain in your CR, and also to establish your date of first default (DOFD) on the OC account, and also the date of commencement of the running of your SOL.
Next, you need to know your state civil code regarding both the date of commencement, and period of running, of your SOL on each debt.
Which to pay first depends, in my opinion, primarily on the threat that each now imposes. Effects of % util would be secondary to me at this point, and would not be my deciding criteria.
Can you provide more specific information on each account?
