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Quick pay down or should I trickle pay it down

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HopeMission
Regular Contributor

Quick pay down or should I trickle pay it down

I have Cap1 QS card with a 10K limit

It has a balance of 2000 (20%)

I have 2,000 cash and would like to pay it down to about (3%)

 

My question is:

Should I just mail in a check for 1,700 to bring it down to 3% today?

Or slowly pay it down 200 each month?

 

In other words:

Despite wanting to just knock it down to 3% today should I slowly pay it down each month for a year or more?

Does it make any different on my credit scores?

 

Thank you in advance Smiley Happy

Ex 673 | Eq 665 | 665 TU (10-9-18)
Filed BK7: 11/2014 (start score TU 749) Discharge 4/2015 578 TU

$11,500 Cap1 Spark | $7,000 Cap1 QS | $5,500 Barclay | $500 Secured card w/ Western Fed CU | $3,000 Un-Secured Fry’s First Electronic Bank | Macy's 3,500 | Disc 11,500 | $100 Un-Secured Share Loan | all Util under 3%
Message 1 of 11
10 REPLIES 10
Anonymous
Not applicable

Re: Quick pay down or should I trickle pay it down

Pay it down as much as you can as soon as you can.  There is no FICO scoring advantage to paying it off slowly, long term or short term.

 

In fact, if you were to only pay a small portion of the debt off each month, you'd be establishing for yourself a history of being a "revolver" -- meaning a person who carries a lot of debt over to the next month, paying much less than the full amount owed.  Such people are statistically far more risky than those who pay their credit card bills in full.  Creditors/lenders now have the ability to see whether a person has been a revolver in the past.

 

Although FICO does not penalize you now for being a revolver, future models likely will.  Unless there is some huge reason not to, you should strive to pay your CC bills in full each month.

Message 2 of 11
Anonymous
Not applicable

Re: Quick pay down or should I trickle pay it down

PS.  It sounds like you may have only one credit card.  If that is the case, you would benefit a good deal from adding a couple more cards, as long as you do it judiciously.  (I.e. carefully research them, don't be in a rush to add just any card, etc.)

 

Also, if you have no open installment loans, the folks here can suggest a nice technique for raising your scores a good 30 points.

Message 3 of 11
HopeMission
Regular Contributor

Re: Quick pay down or should I trickle pay it down

Thank you credit guy, You indicated that there is no benefit of paying it down slowly.  I will pay send in my check tomorrow for 1,700 to bring the UTL down to 3%.  I have heard its good to keep UTL between 3%- 20%.

 

I have a pretty good mix of products including an installment loan.  In fact my installment secured loan for 1K just expired and they offered me an unsecured loan.  I refused because i didnt want to pay the interest.  

 

In the future is there any score advantage to getting an unsecured loan?  Would the only advantage of going unsecured be for future human underwriters/lenders seeing that I was responsible with an unsecured?

 

My credit products are listed in my signature below.

 

Thank you!

Ex 673 | Eq 665 | 665 TU (10-9-18)
Filed BK7: 11/2014 (start score TU 749) Discharge 4/2015 578 TU

$11,500 Cap1 Spark | $7,000 Cap1 QS | $5,500 Barclay | $500 Secured card w/ Western Fed CU | $3,000 Un-Secured Fry’s First Electronic Bank | Macy's 3,500 | Disc 11,500 | $100 Un-Secured Share Loan | all Util under 3%
Message 4 of 11
bettercreditguy1
Established Contributor

Re: Quick pay down or should I trickle pay it down

Also look at how much interest you are saving. Interest saved is money earned. Money left from not paying interest can be used for other  events or more positive situations!

 

Updated scores 3/7/21 TU 849, EQ 829, Ex 818 (all Fico scores) Remember the Three P's: Pay early in Full, Pay on Time, Patience
Message 5 of 11
Anonymous
Not applicable

Re: Quick pay down or should I trickle pay it down

My comments below in blue.  :-)

 


@HopeMission wrote:

Thank you credit guy, You indicated that there is no benefit of paying it down slowly.  I will pay send in my check tomorrow for 1,700 to bring the UTL down to 3%.  I have heard its good to keep UTL between 3%- 20%.

 

There's never a FICO advantage to having your CC utilization above 1%, though there maybe an advantage with Vantage Score.  That said, a totl/aggregate util of anywhere in the 1-9% range is equally good.  When your util exceeds 8.99% you begin taking a scoring penalty.  And remember that FICO rounds up to the nearest integer, so a utilization of 0.2% (for example) is considered by FICO to be 1%.

 

More importantly, however, the penalty associated with higher utilization goes away instantly once you bring it back down into the 1-9% range.  There's therefore no long-term advantage to making sure your utilization always stays 1-9%.  For example, it your total U went up to 40% or more for a few months,, that wouldn't be a problem, as long as you weren't trying to apply for credit during that time.  As I said earlier, I think paying in full is always a good idea, but that is different from what your utilization is.

 

I have a pretty good mix of products including an installment loan.  In fact my installment secured loan for 1K just expired and they offered me an unsecured loan.  I refused because i didnt want to pay the interest.  

 

In the future is there any score advantage to getting an unsecured loan?  Would the only advantage of going unsecured be for future human underwriters/lenders seeing that I was responsible with an unsecured?

 

I suppose that FICO models could give you an extra reward for demonstrating an ability to handle unsecured personal loans (for example).  A secured personal loan takes a huge amount of effort to screw yourself up with.  So arguably they might way down the road try to exclude people benefitting from the Share Sceure Loan trick (widely discussed here) since demonstrating an ability to handle one probably doesn't prove much about one's credit. 

 

But if that were to happen, it would be way in the future and people here will figure that fact out when if it does, I would never choose to pay the high interest rates associated with unsecured loans purely for an imagined scoring benefit.  When your current $500 loan pays off I encourage you to explore the Share Secure technique discussed on this site.  The loans last a long time and only cost a tiny bit of interest.

 

My credit products are listed in my signature below.

 

Thank you!


 

Message 6 of 11
driftless
Valued Contributor

Re: Quick pay down or should I trickle pay it down


@HopeMission wrote:

I have Cap1 QS card with a 10K limit

It has a balance of 2000 (20%)

I have 2,000 cash and would like to pay it down to about (3%)

 

My question is:

Should I just mail in a check for 1,700 to bring it down to 3% today?

Or slowly pay it down 200 each month?

 

In other words:

Despite wanting to just knock it down to 3% today should I slowly pay it down each month for a year or more?

Does it make any different on my credit scores?

 

Thank you in advance Smiley Happy


Pay it down to zero. You pay interest on full amount not just the 3%,
CSR | Amex Platinum | EDP | QS (2)
Amex Blue Business Plus
Message 7 of 11
SouthJamaica
Mega Contributor

Re: Quick pay down or should I trickle pay it down


@HopeMission wrote:

I have Cap1 QS card with a 10K limit

It has a balance of 2000 (20%)

I have 2,000 cash and would like to pay it down to about (3%)

 

My question is:

Should I just mail in a check for 1,700 to bring it down to 3% today?

Or slowly pay it down 200 each month?

 

In other words:

Despite wanting to just knock it down to 3% today should I slowly pay it down each month for a year or more?

Does it make any different on my credit scores?

 

Thank you in advance Smiley Happy


No reason to trickle; just pay it down.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 8 of 11
SouthJamaica
Mega Contributor

Re: Quick pay down or should I trickle pay it down


@HopeMission wrote:

Thank you credit guy, You indicated that there is no benefit of paying it down slowly.  I will pay send in my check tomorrow for 1,700 to bring the UTL down to 3%.  I have heard its good to keep UTL between 3%- 20%.

 

I have a pretty good mix of products including an installment loan.  In fact my installment secured loan for 1K just expired and they offered me an unsecured loan.  I refused because i didnt want to pay the interest.  

 

In the future is there any score advantage to getting an unsecured loan?  Would the only advantage of going unsecured be for future human underwriters/lenders seeing that I was responsible with an unsecured?

 

My credit products are listed in my signature below.

 

Thank you!


In my opinion, no.

 

You should not apply for an unsecured loan.

 

If you want to enhance your credit mix by adding an installment loan, the way to do it without getting into debt over it, and without a hard pull, and with almost no expense, is :

 

1. take out a $500 or bigger savings account with Alliant Credit Union

2. take out a "share secured loan" secured by the savings account with a 48-mo or 60-mo term and no autopay

3. transfer money from the savings account to pay the loan down to a balance of around 9%

 

 


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 9 of 11
HopeMission
Regular Contributor

Re: Quick pay down or should I trickle pay it down

Thank you Credit Guy-  I have learned that the total UTL philosophy of "Dont go under 6% and dont go over 20%" isnt the best idea.  " Total UTL of anywhere in the 1-9%" is best.

 

How can creditors/lenders see if a person has been a "revolver" in the past?  I thought they could only see how high the total balance has reached.

 

Do I understand correctly that even though the "Share Secured Loan" can be described as a trick, its still the best road for now until they change things in the future?

Its dificult for me to wrap my head around the fact that "Secured" is better than "Unsecured" because there have been so many sugesting to graduate that Secured into an unsecured despite the extra interest.

 

 

Ex 673 | Eq 665 | 665 TU (10-9-18)
Filed BK7: 11/2014 (start score TU 749) Discharge 4/2015 578 TU

$11,500 Cap1 Spark | $7,000 Cap1 QS | $5,500 Barclay | $500 Secured card w/ Western Fed CU | $3,000 Un-Secured Fry’s First Electronic Bank | Macy's 3,500 | Disc 11,500 | $100 Un-Secured Share Loan | all Util under 3%
Message 10 of 11
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