Frequent Contributor
Roarmeister
Posts: 333
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.

AMEX_PlatinumBMOWorldMCCapOnePlatinumMBNA_Platinum+ScotiaMomentum
____$25k_______$20k_______$20k_______$25k_______$25k____
Starting Score: 676 Feb 2008; Current Score: 791 EQ; 824 CA, Dec. 2014; TU 814, Oct. 2014; Goal Score: 800 by end of year Oldest Account reported by EQ: 12 years; EQ AAoA: 5.8 years; EQ Credit Utilization: 1.9%