CC payoff now or later?

[Anonymous]

Good Morning....

I am not sure if this is a good question to ask or not but here goes. I currently have 3 cc's with a total balance of $7000. In 2 the beginning of June I will have enough money from the sale of my house to pay this debt off.

In the meantime, I will continue to make my normal payments ($100 each) to the cc companies. Would I have a score increase if I were to pay a little more than my usual unti I pay the debt in full?

I know that my score will jump greatly when it is paid in full.

[Anonymous]

Hi trashy, take a look at  this pie chart:....................

What’s in your FICO® score

FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining your FICO score.

As you can see, 30% of your FICO score is based on amounts owed. The less you owe the better. We call it the utilization factor.

How much your scores will go up depends on the credit limits and balances on each account. Anything over 50% utilization is considered bad in FICO's eyes. Paying only $100/mo. will take you a long time to pay off the balances. And you will not see much of a rise in scores if your utilization factor is to high.

Can you list the credit card, the credit limit and balance of each cc? We can answer you better if we know those things.

[Anonymous]

Thanks Silvia. Here are my balances and limits:

citicard balance 3000 with a 5k limit. 2.9%

juniper bal 1000 with a 2.7k limit   8.9%

CU balance 3800 with a 4.5 k limit. 5.9%

If I had to choose, I was going to dump more money each month into the CU balance given that I am near the limit. They are all on promo rates right now except for Junny (8.9%).

What do you advise?

[Anonymous]

Trashy, your cc balances are $7,800 and your total credit limits are $12,200(am I to assume that the CU is a credit card? We need to know that as well).

Assuming that the CU is a cc, your overall utilization is 63.9%, which is very high and it is hurting your FICO scores. Getting the balances below 50% is a good start. You will see wonderful score rises at 30%, 20% and 10% as well. For optimum FICO scoring the ideal util is 1%-9%.

You really need to get the CU balance down, as you are at 84.4% utilization.

I would suggest paying as much as comfortably possible, as quickly as you can. Only you know how much that amount will be.

I hope that helps a lil bit.

[Anonymous]

it does help Sylvia. Thanks.

Yes, the CU is a cc.

Like I said in the original post, this is just for the next 2 months since in June I will have the money to pay all of it off due to the net from the sale of my home. Would it even help if I made extra payments from now until June or can I just make the usual payment until June when I can pay it all off? My only concern is raising my score.

[Anonymous]

The more you can afford to pay the better. And the sooner the better. I mean, don't put yourself in a severe cash shortage, but as much as you can comfortably afford to pay.

[Anonymous]

I agree with Silvia. Don't pay so much that you strap yourself for cash. We don't know what your financial situation is, but, personally, I would just keep making the same payments until I could pay it off in a couple months. Also, you should know that it is actually better to carry a small credit card balance. If raising your scores in a priority, you may want to consider leaving a few hundred dollars on your Citi card. It has the lowest interest rate. It could be worth up to 20 FICO points to leave a balance. I don't like to carry debt though, so I will be paying mine off completely not long after you. Then a couple months before I plan on applying for credit, I will go buy a new toy from Best Buy or a new suit for work or anything to put a balance on a card to show some utilization.