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Valued Member
Posts: 48
Registered: ‎07-27-2007
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Unsure and want to do the right thing...


Hello to all -- quick question...I've read that the best way to reduce credit card debt is to pay off the ones with the highest interest first and then focus on the next highest, etc. until they are paid off.  I have also read that to increase your FICO score you should have small debt-to-credit ratios on your credit cards.
 
I am paying off about $10,000 worth of debt and I'm not sure which way will help my FICO score most:
1) paying off the highest interest-bearing cards while the lower interest-bearing cards are still almost maxed out leaving me a high debt-to-credit ratio on those cards, or
2) putting payments toward all credit cards (and not paying off largest interest-bearing cards) to reduce my debt-to-credit ratio
 
Suggestions? Advice? Thanks in advance for any help!
Michele
October 2008 TU 687 EQ 644 EX 698

_________________________________________
June 2007 TU 563 EQ 622 EX 539

Super Contributor
Posts: 8,172
Registered: ‎03-25-2007
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Re: Unsure and want to do the right thing...



mlynne37wiu wrote:

Hello to all -- quick question...I've read that the best way to reduce credit card debt is to pay off the ones with the highest interest first and then focus on the next highest, etc. until they are paid off.  I have also read that to increase your FICO score you should have small debt-to-credit ratios on your credit cards.
 
I am paying off about $10,000 worth of debt and I'm not sure which way will help my FICO score most:
1) paying off the highest interest-bearing cards while the lower interest-bearing cards are still almost maxed out leaving me a high debt-to-credit ratio on those cards, or
2) putting payments toward all credit cards (and not paying off largest interest-bearing cards) to reduce my debt-to-credit ratio
 
Suggestions? Advice? Thanks in advance for any help!
Michele


Financial common sense - pay off the high interest cards first.  And it does not matter how you spend the money, your overall utilization will stay the same unless you close some open cards.
 
FICO - does not like overall high util, but also like all cards individually as low as possible.  So FICO would like you to pay more off the maxed out cards.
 
So if you don't need a higher FICO right now, take the former route
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid

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