Reply
New Visitor
brandes815
Posts: 2
Registered: ‎09-10-2010
0

Which should I pay off?

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

Frequent Contributor
DrJim
Posts: 382
Registered: ‎10-26-2009
0

Re: Which should I pay off?

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.



Starting Score: TU 672 EQ 654 10/20/09
Current Score: TU 775 EQ 783 EX 799 (PLUS)
AMEX Delta Platinum $35K, NFCU Visa Signature $30K, HHonors Reserve Visa $35K, WF $13.5K,
Epic Contributor
Creditaddict
Posts: 22,116
Registered: ‎10-23-2007
0

Re: Which should I pay off?

+1

Fico Scores: EQ- 626 Overstck., TU 696 Walmart, EX 695 Chase (11-05-14)
You will have to put up Electric Fence to keep me in the garden!
Highest Limit: Navy Federal Cash Sigi Visa $50k (AU)
Lowest Limit: Target $200
66 Cards and Counting :smileytongue:
New Visitor
brandes815
Posts: 2
Registered: ‎09-10-2010
0

Re: Which should I pay off?

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.

 

Epic Contributor
Creditaddict
Posts: 22,116
Registered: ‎10-23-2007
0

Re: Which should I pay off?

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

Fico Scores: EQ- 626 Overstck., TU 696 Walmart, EX 695 Chase (11-05-14)
You will have to put up Electric Fence to keep me in the garden!
Highest Limit: Navy Federal Cash Sigi Visa $50k (AU)
Lowest Limit: Target $200
66 Cards and Counting :smileytongue:
Moderator
MarineVietVet
Posts: 14,967
Registered: ‎07-14-2009
0

Re: Which should I pay off?

 


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.

 


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.  :smileyhappy:

 

 

 

 

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


Mega Contributor
RobertEG
Posts: 18,543
Registered: ‎03-19-2007
0

Re: Which should I pay off?

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

Pay down revolving (CC) util over installment util.


myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+
}