topic Re: Which to pay off first? in Rebuilding Your Credit

Which to pay off first?

Anonymous — Wed, 08 Apr 2020 18:37:20 GMT

This morning I got an email notification from CreditKarma. (I know my scores on CK isn't reliable but I kinda dont need a really high score as I already have a home and a car. Not looking to finance anything anytime soon.) Anyhow, it says my TU score went up 25 pts from 558 to 583. My EQ still at 569. Really low scores but again, I'm fine with it. I just need help paying down my cards.

Besides my mortgage and car payment...I'm wanting to pay off my balances on my cards to zero but have a hard time trying to figure out. I know I should go with the highest APR first but for me, I want to pay off the lowest balance first that way. Not sure if that even makes sense. I have credit cards and a loan from Affirm. The monthly payment for Affirm is $117 a month. I have about 7 months left. I'm debating whether I should pay more on my Affirm to pay it off earlier. That will give me the extra $117+ to use towards my other cards, starting with the lowest balance first.

Affirm: approx $600 (limit was $1860 for this purhcase)

PayPal MC: $2,400/$2500

Bergdorf Goodman: $1800/$2500

Paypal: #1600/1700

HSN: $805/900

CreditOne: $650/$700

Indigo: $257/$300

Saks: $70/$500 (just paid this off. waiting for it to report to the CRA)

CFNA: $62/$1000 (just paid this off. waiting for it to report to the CRA)

Re: Which to pay off first?

Brian_Earl_Spilner — Wed, 08 Apr 2020 18:45:29 GMT

Personally, I would pay them all down to 85% first. This will allow you to pay the minimum payment without going over that last utilization threshold. At that point, depending on balances and payment amounts, work on high APR or lowest balance. I went with lowest balances because it freed up more money for larger payments as I progressed. Any savings in interest I would have got by working on 1 high APR card is being mitigated by 5 other cards also charging me 24%+ interest.

Re: Which to pay off first?

RSX — Wed, 08 Apr 2020 18:57:10 GMT

** - keep regular payments on this one - it is actually helping your score Affirm: approx $600 (limit was $1860 for this purhcase)

pay this one to $2220 if possible - it is maxed right now and hurting your score PayPal MC: $2,400/$2500

Bergdorf Goodman: $1800/$2500

pay this one to $1500 if possible - it is maxed right now and hurting your score Paypal: #1600/1700

pay this one to $790 if possible - it is maxed right now and hurting your score HSN: $805/900

pay this one to $600 if possible - it is maxed right now and hurting your score CreditOne: $650/$700

Indigo: $257/$300

Saks: $70/$500 (just paid this off. waiting for it to report to the CRA)

CFNA: $62/$1000 (just paid this off. waiting for it to report to the CRA)

Not just for scoring reasons, you dont want that many (or any) CC's reporting as maxed - this can cause an AA activity - looks like you need

a spreadsheet setup to help you track your minimum payments and total balances - i use this one found here

https://www.vertex42.com/Calculators/debt-reduction-calculator.html

once you hit all the above paydowns, then pay whichever strategy makes you feel more comfortable - either Highest APR or lowest balance

however i would focus on the CC's and leave the loan at regular payments

Re: Which to pay off first?

Anonymous — Wed, 08 Apr 2020 19:24:28 GMT

@Brian_Earl_Spilner: Thank you for your input. Just wondering...what would the 85% utilization do? I just always read that less than 10% utilization was good but I guess the 85% utilization would make it seem as if I'm not really maxxed out?

@RSX: Thank you for your input. I do have an excel sheet that I keep track of all my bills, balances, due dates, etc. I've created different tabs on my excel sheet with the different scenarios if I paid a certain account off first, etc. I'll keep Affirm payments as it is and tackle the rest.

Re: Which to pay off first?

RSX — Wed, 08 Apr 2020 19:39:50 GMT

A good scale to remember are the Brackets 8.9%, 28.9%, 48.9%, 68.9%, and 88.9% (maxed).

so if you drop all your accounts below 89%, they wont be seen as MAXED by the lenders

it is always a good first step to take, before tackling the actual full paydown of an account

also, unless you make the minimum payment + the interest charge, you can bump back over 89% by the monthly interest charge

so the suggestion to hit 85% initially, is to avoid that situation

i would make all minimum payments +$25 for all accounts, then pick which one is going to get your extra money for the month

Re: Which to pay off first?

Anonymous — Wed, 08 Apr 2020 19:39:26 GMT

@RSX- Thanks for the bracket info. I wasn't aware of that. I'll drop them below 89% first before tackling each account. Thanks again.

Re: Which to pay off first?

Anonymous — Wed, 08 Apr 2020 21:24:07 GMT

Oof, I came on here to offer my condolences for Indigo and Credit One. I have them too

I second paying them all down to a lower balance, then tackling from there. I just finished a "debt bootcamp" and watching those balances drop was fantastic. Good luck!!

Re: Which to pay off first?

Anonymous — Wed, 08 Apr 2020 21:59:24 GMT

I really didn't want Indigo or CreditOne but I needed something! LOL. I can't wait to get rid of them. And thanks! It'll be a long journey but that's ok.

Re: Which to pay off first?

Anonymous — Tue, 05 May 2020 18:03:46 GMT