Rebuilding Your Credit

[brandes815]

Hi,

I just sold a car and have enough money to either pay off one big personal loan or several credit cards.  I don't know which I should pay off...which would build my credit better? 

Thanks

[DrJim]

I would payy of the cards first, especially if I had high utilization.

That would be my answer if you are just looking at FICO score.  There are other factors however.  One is the interest rate being charged.  If you're paying 8% on the loan and 0% on the cards you might want to pay the loan off.  What about cash flow?  I once had the choice of paying off a number of cards and saving $225 a month in payments, or paying off a loan and saving $1,000 a month.

So, really, the question is what are you trying to accomplish?

Simply for FICO, probably the cards.

[Creditaddict]

+1

[brandes815]

Thank you!  I didn't even know I had a reply until today.  I just want to build better credit.  Do you know how much scores can jump when cc's are paid off?  There may be soemwhere for me to find it on here, so I apologize if I've overlooked.

[Creditaddict]

depending on current util, you could see a very large jump when going from a number of accounts having large balances, then having no balance at all

[MarineVietVet]

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brandes815 wrote:

Thank you!  I didn't even know I had a reply until today.  I just want to build better credit.  Do you know how much scores can jump when cc's are paid off?  There may be soemwhere for me to find it on here, so I apologize if I've overlooked.

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If your report is clean you should see a bump but exactly how much is very tough to say. Just feel good about paying down CC debt. 

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

[RobertEG]

From simply a FICO scoring perspective, it is a no-brainer.

Pay down revolving (CC) util over installment util.