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

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: 365
Registered: ‎10-26-2009

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 795 Dec 2013
AMEX Delta Platinum $35K, NFCU Visa Signature $30K, HHonors Reserve Visa $35K, WF $13.5K,
Mega Contributor
Creditaddict
Posts: 18,877
Registered: ‎10-23-2007

Re: Which should I pay off?

+1

Fico Scores: EQ 639 Navy, TU 665 GE, EX 677 Prosper (07-09-14)
You will have to put up Electric Fence to keep me in the garden!
Highest Limit: Fidelity Amex $25k (AU)
Lowest Limit: Buckle $250
Over 30 Cards in between :smileytongue:
New Visitor
brandes815
Posts: 2
Registered: ‎09-10-2010

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.

 

Mega Contributor
Creditaddict
Posts: 18,877
Registered: ‎10-23-2007

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 639 Navy, TU 665 GE, EX 677 Prosper (07-09-14)
You will have to put up Electric Fence to keep me in the garden!
Highest Limit: Fidelity Amex $25k (AU)
Lowest Limit: Buckle $250
Over 30 Cards in between :smileytongue:
Moderator Emeritus
MarineVietVet
Posts: 14,084
Registered: ‎07-14-2009

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: 17,456
Registered: ‎03-19-2007

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
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+