Valued Member
shorttough
Posts: 44
Registered: ‎11-07-2012
prioritize paying of CC balance vs bringing 50% below

hi all,

I have two credit cards that i feel i could potentially lower my balance on as I have limited cash.

 

Discover card - 1201.00  LIMIT: 2500

Citi Siplicity - 5921.00     LIMIT: 8000

 

Now, should i prioritize paying off the Discover Card ?  and then bring the Citi CC balance to 4000.00 from 5921.00? for great impact on scores?

 

Current Scores are:

TransUnion : 727

Equifax: 719

Experian: 676

Established Contributor
pakman92
Posts: 650
Registered: ‎03-01-2012
Re: prioritize paying of CC balance vs bringing 50% below

shorttough wrote:

hi all,

I have two credit cards that i feel i could potentially lower my balance on as I have limited cash.

 

Discover card - 1201.00  LIMIT: 2500

Citi Siplicity - 5921.00     LIMIT: 8000

 

Now, should i prioritize paying off the Discover Card ?  and then bring the Citi CC balance to 4000.00 from 5921.00? for great impact on scores?

 

Current Scores are:

TransUnion : 727

Equifax: 719

Experian: 676


There are three factors at work here.

 

1. Overall Util - for this it doesn't matter what you do.

2. Undividual Card Util - This is a factor smaller thatn the first.  I think it starts to hurt when it's very high >80%.  So this should matter either.

3. Number of cards reporting a balance. - This is a factor smaller than #1, but, may be a significant factor in your case specially if you only have those two cards.

 

Given the above,  I would pay Discover in full and pay down Citi as much as you can.

 

 


My Starting Score: EQ: 691 (11/30/11) TU98: 726 (11/30/11)
My Current Score: EQ: 779 (04/22/13) TU08: 835 (06/03/13)
DW Starting Score: EQ: 742 (03/02/12) TU98: 748 (03/02/12)
DW Current Score: EQ: 784 (03/11/13) TU08: 775 (06/03/13)
Frequent Contributor
Roarmeister
Posts: 284
Registered: ‎04-21-2012
Re: prioritize paying of CC balance vs bringing 50% below

shorttough wrote:

hi all,

I have two credit cards that i feel i could potentially lower my balance on as I have limited cash.

 

Discover card - 1201.00  LIMIT: 2500

Citi Siplicity - 5921.00     LIMIT: 8000

 

Now, should i prioritize paying off the Discover Card ?  and then bring the Citi CC balance to 4000.00 from 5921.00? for great impact on scores?

 

Current Scores are:

TransUnion : 727

Equifax: 719

Experian: 676


You have to ask yourself - "What is MY priority?"  Do you want to see the best score increase immediately or do you want to pay the least amount of money in interest?  The two are not necessarily mutual. 

 

Which of the two cards has the highest interest rate?  Standard advice is to do what benefits you the most financially and that is pay to the card that has the highest interest rate. Don't chase your credit score just for the sake of chasing a higher score.  Do what benefits YOU the most unless you need the higher score immediately because you are going to apply for additional credit.

 

If the two cards are equal or very close in rate then pay off the lowest card owing completely and what ever you can afford on the second (provided it is at least the min. due).  By eliminating one trade line reporting a balance to the CRAs, you should increase your score.  You can then concentrate your efforts on paying the other card down.  As the second card's balance decreases you will gain additional points on your credit score.

AmexGoldBMOWorldMCCapOnePlatinumMBNA_Platinum+ScotiaMomentum
___$18.5k______$20k_______$20k_______$25k_______$20k____
Starting Score: 676 Feb 2008; Current Score: 771 EQ, April 2014; Goal Score: 780 by end of year
Oldest Account: 32.0 years; Current AAoA: 15.1 years; Current Credit Utilization: 1.4%
Valued Member
shorttough
Posts: 44
Registered: ‎11-07-2012
Re: prioritize paying of CC balance vs bringing 50% below

Thank you, I have 11 CCs and 6 of them are reporting balances, my score went down from 738 to 719. I'm trying to increase it to 740+ from 719 by August for a house purchase.