Work Bonus - Paying off Cards - Help

[dallasareaguy]

I am taking a work bonus and paying off revolving debt. Can anyone give me good sound advice on which to pay off to help my scores climb the highest and be in the best position FICO possible in July?

Of this remaining $5,576 debt, I am able to put about $3000 towards it taking myself to about 18% utilization after all is said and done. I'm also hoping that with a score jump and lower utilization that I will get some increases on my various credit lines which will then lower utilization even further by end of July.

QUESTION: Is it better strategy to pay something on all cards to get them below 30% (or some other magic number) each or better to just knock off more of the highest balances. I was thinking of paying off the $1450, and 3 of the $500ish balances... but now I'm wondering if thats the best approach.

What I know now: My scores were between 630-650 when I had 25% utilization but when I'm at 50-60% utilization and have cards that are near maxed, I am seeing my score drop to 580-600. (Yuk!) Not sure if the 50-60% utilization is dropping it the most or the fact so many cards are 90+% utilization each.

I'm trying to figure out whether FICO wants to see more cards paid below 30% or removal of high balances.

PS - Please don't judge my high utilization of the cards below.. we did a lot of shopping knowing this bonus was coming for different family needs -- our plan is to not charge these back up.

Here is the scenario:

Current Revolving Debt: $5,576 of $13,150 (44%)

Balances:

$1450 of $1500 (97%)

$486 of $500 (97%)

$499 of $500 (99%)

$395 of $400 (99%)

$95 of $1050 (9%)

$593 of $900 (66%)

$279 of $800 (35%)

$670 of $750 (89%)

$546 of $750 (73%)

$280 of $300 (93%)

$120 of $250 (48%)

$155 of $250 (62%)

Thanks for any help you experts can provide!

[Anonymous]

Most people tackle the ones with the highest interest rates first but since you have some with 90%+ utilization I would tackle those first.

[crrredit]

If you're putting the same amount of cash toward paying off some of your debt, then you'll reduce your overall Util% by the same amount, whatever you do. But since the utilization rate on individual cards matters in the score calculation, then addressing the cards in the 90s might help. The lower balance cards in the 90s would be easier to pay down, of course. 

If it weren't for your effort to get something done by July, I'd pay the high interest rates off first, regardless of utilization issues, because utilization % is temporary, and you can pay less money in the long run by getting rid of high interest rate balances.

[tufa4311]

If you could list the Interest Rates that would really allow for a point for point run down but since I don't have that I'll assume the interest rates are not "that" different, which may or may not be true. If the interest rates where the same or close I'd pay as many off as possible in full:

	Paying	UTIL
$110 of $1500 (7%)	1340	7.33
$0 of $500 (0%)	486	0.00
$0 of $500 (0%)	499	0.00
$0 of $400 (0%)	395	0.00
$95 of $1050 (9%)	-	9.05
$593 of $900 (66%)	-	65.89
$279 of $800 (35%)	-	34.88
$670 of $750 (89%)	-	89.33
$546 of $750 (73%)	-	72.80
$0 of $300 (0%)	280	0.00
$120 of $250 (48%)	-	48.00
$155 of $250 (62%)	-	62.00
$2568 Balance Remaining	3000	32% UTIL Overall

But like crrredit said, UTIL is temporary but you'll never get back the money you paid to the higher interest cards if indeed there are any that are exhorborantly higher than the rest.

[Anonymous]

Tufa is awesome

[dallasareaguy]

---

@tufa4311 wrote:

If you could list the Interest Rates that would really allow for a point for point run down but since I don't have that I'll assume the interest rates are not "that" different, which may or may not be true. If the interest rates where the same or close I'd pay as many off as possible in full:

	Paying	UTIL
$110 of $1500 (7%)	1340	7.33
$0 of $500 (0%)	486	0.00
$0 of $500 (0%)	499	0.00
$0 of $400 (0%)	395	0.00
$95 of $1050 (9%)	-	9.05
$593 of $900 (66%)	-	65.89
$279 of $800 (35%)	-	34.88
$670 of $750 (89%)	-	89.33
$546 of $750 (73%)	-	72.80
$0 of $300 (0%)	280	0.00
$120 of $250 (48%)	-	48.00
$155 of $250 (62%)	-	62.00
$2568 Balance Remaining	3000	32% UTIL Overall

But like crrredit said, UTIL is temporary but you'll never get back the money you paid to the higher interest cards if indeed there are any that are exhorborantly higher than the rest.

---

Thank you! This information is very helpful. I should have mentioned whatever I don't pay off this month, I am paying off next month. The two $500 and $400 cards you selected above happen to be the highest rate interest... and the top one is my QS1 which I wanted to pay down for CLI from Capital One (targeting next month)

Your info was very helpful and thanks for putting time into it!

[tufa4311]

Alright then, it sounds like you have a plan (don't all those %0's look good! Excel and formula's, luv 'em) - kudos for taking that bonus and putting it against your debt - it would be so easy to just go out and spend it. And YW, myFICO helped me thus I try to help back.

[Anonymous]

Many good suggestions. However, scores aren't everything. Another issue with running up cards extremely high, in regards to credit limits and/or balances compared to past usage, is getting balance chased. That is when a card issuer reduces the credit limit as one pays down the card. On the bright side, since your card limits are very low (well under $5K, which many consider the threshold of prime limits), the risk is minimal.

tufa4311 suggested pay chart is excellent. However, if you're able, pay off the $1450 card entirely. While leaving a small balance verses paying in full should have the same effect on score, the issuer may view PIF more favorably than carrying a balance, no matter how small. Card issuers don't just look at scores, but also overall credit profile.

[RobertEG]

I concur regarding potential reduction of credit limits.

Keeing cards at or near max is a good way ot get your credit limits sliced.

That will have scoring impacts, as paying will then not reduce your % utils.

I also assume that none of the accounts are currently delinquent?

If so, that changes things........

[Anonymous]

---

@dallasareaguy wrote:

---

@tufa4311 wrote:

If you could list the Interest Rates that would really allow for a point for point run down but since I don't have that I'll assume the interest rates are not "that" different, which may or may not be true. If the interest rates where the same or close I'd pay as many off as possible in full:

	Paying	UTIL
$110 of $1500 (7%)	1340	7.33
$0 of $500 (0%)	486	0.00
$0 of $500 (0%)	499	0.00
$0 of $400 (0%)	395	0.00
$95 of $1050 (9%)	-	9.05
$593 of $900 (66%)	-	65.89
$279 of $800 (35%)	-	34.88
$670 of $750 (89%)	-	89.33
$546 of $750 (73%)	-	72.80
$0 of $300 (0%)	280	0.00
$120 of $250 (48%)	-	48.00
$155 of $250 (62%)	-	62.00
$2568 Balance Remaining	3000	32% UTIL Overall

But like crrredit said, UTIL is temporary but you'll never get back the money you paid to the higher interest cards if indeed there are any that are exhorborantly higher than the rest.

---

Thank you! This information is very helpful. I should have mentioned whatever I don't pay off this month, I am paying off next month. The two $500 and $400 cards you selected above happen to be the highest rate interest... and the top one is my QS1 which I wanted to pay down for CLI from Capital One (targeting next month)

Your info was very helpful and thanks for putting time into it!

---

If thats the case it doesn't really matter which ones you pay first, you'll still be in the same place next month with everything paid down. Since UTI has no memory, where you were at in the interim month makes no difference. Just figure out which ones are going to cost the most in interest if you want to save a few bucks. Thats not going to be as simple as going by percentage rate - multiply the balance times the interest rate to get the actual cost of that balance.