topic Re: Which Credit Cards Should I pay down below 30% in Understanding FICO® Scoring

Which Credit Cards Should I pay down below 30%

Anonymous — Thu, 19 Jan 2017 22:02:12 GMT

I have four credit card accounts that are maxed out.

3 are $12k each, 1 is $30k.

I have gotten some money and so can make payment and reduce the balances.

I do not have enough to get all accounts below 30% (Debt to Line), But can make some
accounts under 30% and the rest below 50%.

Which scenario improves my credit score the most?

Make the three smaller accounts below 30 %, and the larger account below 50%.

Make the larger account below 30%, and the smaller accounts below 50%

Please advise?

Re: Which Credit Cards Should I pay down below 30%

BronzeTrader — Thu, 19 Jan 2017 22:11:40 GMT

@Anonymous wrote:
I have four credit card accounts that are maxed out.
3 are $12k each, 1 is $30k.

I have gotten some money and so can make payment and reduce the balances.
I do not have enough to get all accounts below 30% (Debt to Line), But can make some
accounts under 30% and the rest below 50%.

Which scenario improves my credit score the most?
Make the three smaller accounts below 30 %, and the larger account below 50%.
or
Make the larger account below 30%, and the smaller accounts below 50%

Please advise?

I'd want to drop down the % on all of them, better than one is 5% and one is 85%. You are penalized for the highest utilization %.

Re: Which Credit Cards Should I pay down below 30%

SouthJamaica — Fri, 20 Jan 2017 01:04:37 GMT

@Anonymous wrote:
I have four credit card accounts that are maxed out.
3 are $12k each, 1 is $30k.

I have gotten some money and so can make payment and reduce the balances.
I do not have enough to get all accounts below 30% (Debt to Line), But can make some
accounts under 30% and the rest below 50%.

Which scenario improves my credit score the most?
Make the three smaller accounts below 30 %, and the larger account below 50%.<--this one
or z
Make the larger account below 30%, and the smaller accounts below 50%

Please advise?

Re: Which Credit Cards Should I pay down below 30%

grillandwinemaster — Fri, 20 Jan 2017 01:28:16 GMT

I'm going to go against popular opinion here...

You have over 65k in credit card debt! If you did not "come into" this money, would you have been able to pay off your cards in the next 12-18 months?

If the answer is no, you have bigger problems to consider than a credit score.

You don't mention how much money you have available, and I'm too lazy to do the math, but I would bring as many accounts down to zero as possible.

Then focus on making larger payments to the remaining accounts.

I would rather have less accounts to pay off. Ultimately, your going to owe the same amount inn either scenario. But having less accounts owing, inn my opinion is less psychologically stressing!

Best credit wishes to you!

Re: Which Credit Cards Should I pay down below 30%

Anonymous — Fri, 20 Jan 2017 03:06:38 GMT

Thanks for your reply.

The question still remains unanswered. But lets posit three scenarios now versus two.

A. All accounts paid off by the same percentage.

B. Multiple Smaller accounts at 30 %, with the larger account at 50%

C. Or largest account at 30% with muliple accounts at 50%

Which scenario works best to affect FICO score?

And yes, we already know, that paying everything off totally, is the best but thats not going to happen in the near future.

A, B or C can and will happen this week. Which of those is best for FiCo score?

Re: Which Credit Cards Should I pay down below 30%

AverageJoesCredit — Fri, 20 Jan 2017 03:21:45 GMT

Re: Which Credit Cards Should I pay down below 30%

Anonymous — Fri, 20 Jan 2017 03:23:29 GMT

@SouthJamaica wrote:
@Anonymous wrote:
I have four credit card accounts that are maxed out.
3 are $12k each, 1 is $30k.

I have gotten some money and so can make payment and reduce the balances.
I do not have enough to get all accounts below 30% (Debt to Line), But can make some
accounts under 30% and the rest below 50%.

Which scenario improves my credit score the most?
Make the three smaller accounts below 30 %, and the larger account below 50%.<--this one
or z
Make the larger account below 30%, and the smaller accounts below 50%

Please advise?

You were answered......see in red above.

Re: Which Credit Cards Should I pay down below 30%

gardini51 — Fri, 20 Jan 2017 03:26:35 GMT

@grillandwinemaster wrote:
I'm going to go against popular opinion here...
You have over 65k in credit card debt! If you did not "come into" this money, would you have been able to pay off your cards in the next 12-18 months?

If the answer is no, you have bigger problems to consider than a credit score.

You don't mention how much money you have available, and I'm too lazy to do the math, but I would bring as many accounts down to zero as possible.

Then focus on making larger payments to the remaining accounts.

I would rather have less accounts to pay off. Ultimately, your going to owe the same amount inn either scenario. But having less accounts owing, inn my opinion is less psychologically stressing!
Best credit wishes to you!

I would almost have to agree here. I did some quick math based on the numbers given. Seems that there is about 66k in credit card debt and the poster has come in to about 40k in money. If it were me, I would pay off the 3 12k cards first, then I would pay the extra 4k towards the last one. Then I would more than likely look into some sort of personal loan to get just to lower the interest rate. After doing all this, put all 4 credit cards in a lockbox and hide it. But on the other hand if you were to try for a personal loan it would be beneficial to boost your score a little, so paying the 3 down to under 30% and then the last one to 50% would be the better strategy for a score bump to try and qualify for a better rate.

Re: Which Credit Cards Should I pay down below 30%

Anonymous — Fri, 20 Jan 2017 04:19:18 GMT

pay off as much as you can but still leave money leftover so you wont have to used the cards you just made payments on its best to pay them off over time in a smart way that you can maintain and improve you score as well and not get caught in that whole pay off and turn around re used trap.

Re: Which Credit Cards Should I pay down below 30%

Anonymous — Fri, 20 Jan 2017 06:56:10 GMT

B is slightly better because you'll have 3 accounts reporting under 30% as opposed to one. But you'll still be at 40% aggregate util... so don't expect such a big bump in points. Maybe 15-20 points depending on your current scores. Once you get aggregate util under 30% you'll see more points. Once at least half your credit cards report 0 balance you'll see even more points.

Re: Which Credit Cards Should I pay down below 30%

Anonymous — Fri, 20 Jan 2017 07:33:30 GMT

PAY OFF the smallest two. Cut em up or close those accounts completely. And work on paying off the 3rd big boi.
Solves part of the problem.

Re: Which Credit Cards Should I pay down below 30%

Turbobuick — Fri, 20 Jan 2017 07:38:50 GMT

I would pay off according to percentage rate if you want to minimize cost in the long run.

Re: Which Credit Cards Should I pay down below 30%

Chris679 — Fri, 20 Jan 2017 08:05:37 GMT

@Turbobuick wrote:
I would pay off according to percentage rate if you want to minimize cost in the long run.

Correct. If you are paying interest on credit card balances the best move is to pay them off in the order of highest APR first. Don't let your credit score cost you money but making a sub-optimal decision about which card to pay so you can improve your FICO score a few points. This way will pay the cards off faster and will save you the most money as well.

Re: Which Credit Cards Should I pay down below 30%

Anonymous — Fri, 20 Jan 2017 08:35:24 GMT

I agree with paying off the highest interest rate card first, then working to the next highest etc.

The last thing someone with $66k in CC debt should be worrying about is the utilization sector of FICO scoring; the only focus should be getting rid of that CC debt as fast as possible and at the least cost (interest) and trust me, your FICO scores will respond favorably.

Re: Which Credit Cards Should I pay down below 30%

BronzeTrader — Fri, 20 Jan 2017 12:02:26 GMT

This thread is getting longer and longer This seems a very simple thing to figure out. Do whatever you feel like. Not science or art, use common sense.

Re: Which Credit Cards Should I pay down below 30%

SouthJamaica — Fri, 20 Jan 2017 12:53:27 GMT

@Justagirl73 wrote:
@SouthJamaica wrote:
@Anonymous wrote:
I have four credit card accounts that are maxed out.
3 are $12k each, 1 is $30k.

I have gotten some money and so can make payment and reduce the balances.
I do not have enough to get all accounts below 30% (Debt to Line), But can make some
accounts under 30% and the rest below 50%.

Which scenario improves my credit score the most?
Make the three smaller accounts below 30 %, and the larger account below 50%.<--this one
or z
Make the larger account below 30%, and the smaller accounts below 50%

Please advise?

You were answered......see in red above.

Thanks Justagirl

Re: Which Credit Cards Should I pay down below 30%

MrsCHX — Fri, 20 Jan 2017 14:20:27 GMT

What are you making in monthly payments?

What is the utilization on each card?

WIth the limited info provided, I would also get rid of 3, and then aggressively pay down the $30k card. You have to be paying what? At least a thousand dollars a month in minimums?? If you pay off the 3 $12k completely and put the remaining on the $30k card and then put all of your former payments towards the big card, you should be out within 2 years.

Re: Which Credit Cards Should I pay down below 30%

K-in-Boston — Fri, 20 Jan 2017 14:27:09 GMT

As someone who found themselves in the same situation (although many more cards and more than twice the dollars) and has been working to get rid of it, I hope that I can offer some insight. Are you planning to apply for a mortgage or auto loan in the very near future? If the answer is no, I would suggest working on a strategy to pay off the debt faster rather than worrying about slightly increasing your credit score in the short term. That will take care of itself as the balances come down, the accounts age and the accompanying payment history to go along with it.

Does the $30k card have any balance transfer offers? If the answer if yes, I would highly suggest that you pay it and one of the $12k cards off completely and move the entire remaining balances to the 30% card. If the previous posters' math works out to be your dollar amounts, then this should put you at about 87% on that card and 0% on the rest. From where you are right now, you will already see a huge boost in scores anyway and whatever you have been paying on the 4 cards could then be applied to that balance which will come down quickly. That will likely save you thousands of dollars! If the $30k card does not have a BT offer, try calling the lender to see if one is available, or I would suggest looking into what is available on the 12k cards.

Moving the balances to a loan as has been suggested would really only make sense if you were trying to maximize your score for a mortgage in my opinion. You're very likely not going to get a rate low enough to compete with even a 1.99% + 3% fee or 0% + 5% fee BT offer. I don't know about you, but paying an extra $2k or something every year in interest is not worth an extra 10 points on my credit score.

Re: Which Credit Cards Should I pay down below 30%

grillandwinemaster — Fri, 20 Jan 2017 16:05:14 GMT

Very nicely articulated, K!

Re: Which Credit Cards Should I pay down below 30%

Anonymous — Fri, 20 Jan 2017 17:37:18 GMT

Thanks Everyone for the comments and feedback.

Yes, I am planning to refi my mortgage. And with the refi proceeds ALL my credit card debt will be paid off. However in order to be approved for the refi my FICO score needs to improve. Thats why I am asking for what to do in the short term, with the money I have, to increase my FICO score.

After reading the comments, I now have 4 scenarios

A. All accounts paid off by the same percentage.

B. Multiple Smaller accounts at 30 %, with the larger account at 50%

C. Or largest account at 30% with muliple accounts at 50%

D. Pay off as many small accounts as possible, transfer balances to the largest account.

Which scenario works best to affect FICO score? If you recommend one over the other please explain why?