Community Leader
Senior Contributor
Posts: 4,752
Registered: ‎11-13-2012
Re: Want to be debt free with min. Cards

First congratulation on your decision!  I would only close accounts which have absolutely no benefit to the scores in terms of AAoA or util. Of course keep the cards which give you benefits. If you want to PIF in the future APR is not important at all but rather other benefits come in like cash back, points, miles, etc. Then pay down highests interest cards first, try to get util below 49% then in the next step down to less than 9% and at a later stage let the cards report 0 balance with 1 of a util of less than 7%. This will probably get best results on Fico scores. Never try to have all cards report with 0 balance as this is contraproductive. Just tested it and got a drop of 15 points for 0 balance reporting on all cards. 1 card with a low balance brought me back up. You might also need some testing with your own profile as Fico does not behave the same way for everybody. Why not simply pay off the cards and at a later stage decide to close them when you are close to your goal and you might have other priorities for your selection than now?  If you are worried about not being able to control them I would also use an Excel sheet  to keep track and make sure absolute no late payments will occur. The most important is to start with the purchase habit "buy with your credit card the same way as with a debit card" and if you do this you can actually take great benefit from the credit cards. (my debit cards stay in the sockdrawer)

Good luck and do not give up on your goal - you will sleep better debt free !



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