@Anonymous wrote:
Hey guys!! I'm brand new to this forum and pretty new at rebuilding my credit. I have maxed out most of my credit cards but want to get some of them paid down this month. I have $2500 to pay towards them but I'm unsure as to where to start to get the most "bang for my buck " as far as my credit score.
This is my utilization as of today.
Credit One: 0/500
Credit One: 561/650 86%
Cap One: 372/550 68%
Cap One: 1095/1150 95%
Cap One: 1132/1250 91%
Ollo: 1293/1500 86%
My EX score is 557 as of yesterday.
Thanks so much for your help.
Hi @Anonymous and welcome to the forum! Up above in bold italics I've put the utilization percentage of each card. This is a very important metric - there are scoring tiers in credit based on how much of your limit you have used. They are:
8.9/28.9/48.9/68.9/88.9%
These tiers apply to individual cards as well as your aggregate usage (in your case, that is 78.1% which is very high). Typically we look at being under 48.9% as being safe, so long as you're making progress decreasing this each month. Your $2500 can reduce your overall usage from 78.1% down to 34.3%, which would be great. You would cross two scoring tiers, and each of those could boost your scores by 15 points, possibly a bit more.
You're right to ask how best to do it though, because by bringing your cards through tiers as well, you can net additional points. First priority is to get each below 48.9%. In reality you should shoot for 47% so that when interest is added, you remain below the 48.9% breakpoint. That means paying the following amounts:
Credit One - $256
Cap One #1 - $114
Cap One #2 - $555
Cap One #3 - $545
Ollo - $587
That gets each card to 47% and gets you out of danger territory. So far that's a total of $2057 spent, leaving $443 to go. I would put $305 more on Credit One and pay it off, and then $138 on Cap One #1 to pay that down to $120. That's a total of $2500. Final payments then would be as follows:
Credit One - $561 (pay off)
Cap One #1 - $252
Cap One #2 - $555
Cap One #3 - $545
Ollo - $587
You will have two cards at zero, a $120 balance on a third (pay that off as soon as you can), and safer balances on the rest which you can work down.
Note that after paying $2500 on your cards, your aggregate usage is 34.3%. Paying that down to 27% gets you comfortably under another scoring tier and into no-worry territory. That would be just over $400. If you can put that much more into your cards in the near future, you'd be looking at another score jump. I would apply it in such a way that it pays off as much of another card as possible. Additional points are realized by having fewer than 50% of your cards with a balance in some scoring models. Getting your usage to 27% conceivably could put your score over 600. It makes a difference!
