Best Strategy to pay a lump sum off

[Anonymous]

Hi all,

Bit of background prior to asking for advice!

I have 7 cards, all with CL's of $5,000-$6,000. Historically they have all been pretty much maxxed, 90% usage plus, which was not causing me any financial stress as I could afford the payments on them all, but I made the decision at the beginning of the year to attack this and pay it off. My official Fico score sits at 642 right now and the main reason for this is obviously the utilization rate being so high. Never missed a payment, only new accounts and pulls have been for my mortgage last year and my income is high enough to be in good shape.

Since January I have managed to save about $11,000 which I am going to pay off, this also includes clearing one of my cards completely, so I now stand at 6 cards with about $25k spread between them, all at roughly 90% utilization.

My question is, am I better off clearing two to zero balances, or spreading the $11,000 between all of them thus reducing utilization on each card? The aim here is to see the biggest increase in score. 

I was pretty set on clearing two more, so I have 3 at zero balance and 4 still reporting 90%, but got thinking if I could reduce utilization to below 69% on all cards that might bump my score up higher?

What are peoples opinions?

[CBrow]

I don't think that your main concern should be your credit score at this moment. Your main concern should be getting that debt down. 

I would recommend putting the money on the card(s) with the highest interest rates and wiping that debt completely. That way, you won't have the interest accumulation eating at your cash flow. That extra 'savings' can go towards the other cards to pay them down faster.

Regardless, your credit score will improve.

[RSX]

i would spread the amount across all of them to get them to all under 69% 

then put the rest towards the one with the highest interest

in any climate, it is not great to have 6-7 cards reporting max amounts ( or 2-3 for that matter)

while i applaud you for saving the $11k since Jan,  i think it could have been used over the last 3 months to make double the minimum payments on every card and have them all going lower at the same time

but that is future advice at this point

you will see a score jump when you do this paydown

but more importantly, you will appear a lot safer to your current lenders and future ones as well

[Anonymous]

In the current lending climate, with banks tightening up, I would get all cards out of maxed territory first. Budget to get them all down around 85% and then see what you can do afterward. If you can get them all down below 69%, that'll help even more. Once you're under that level you can breathe a little easier and then attack them via whatever system you want.