@Aramos wrote:I finally have the opportunity in life with a higher income to get rid of a lot of debt. I will be receiving in the next couple of days a pretty big chunk of money in which I plan on using to pay down 5 CCs that all have 90%+ utilization. The question that I have is should I pay all 5 cards down to $0 immediately and risk balance chasing (Amex, Discover, Capital One, Wells Fargo, Macy's) or should I pay them down incrementally?
For example paying them down each to 8.9% in one payment this month, and next month paying the rest of each card's 8.9% off completely? Or just go ahead and pay them all down to 0% this month?
Side question: Which would have the biggest benefit to my score / credit? Would a card that has a few late payments on it be more likely to do a goodwill removal ( I am not too worried about this but figured I would ask) ?
Pay them all down to zero. Make sure at least one card reports a small balance before you pay it off.
@Aramos wrote:Perfect perspective, thank you!! As far as letting one report a small amount that is always something that has just barely eluded me so in my attempt to clarify for myself if you could help me I shall list it as as I understand it.
I should let 1 of my CCs report, as in let the statement post the balance,
That is assuming that the statement balance is the reported balance, which is true for most, but not all, credit cards. Do you know if your lenders always report the statement balance? Also there's a separate issue for Chase cards, as Chase will report mid-cycle if the account is paid down to zero mid-cycle. Also, there are some reports of store cards, and of some credit union cards, not being counted if they are relied on as the single card reporting a balance. So to be on the safe side, you might want to tell us which lender you are planning on using to report a balance.
a small amount of typically <9% of the individual CC limit
Yes. Ideally it should be at least $10 but no more than 8% of the limit.
to display a sense of debt management and that I utilize the card itself
No. The reason is to avoid the "all zero" penalty built into all the FICO algorithms.
which in turn they like since it shows I can handle the CC and it's limit. All other cards should report $0=0% util but I should still utilize those cards for their individual benefits such as cash back or travel rewards to display to the respective creditors that I also utilize their CC.
Sure you can use them as much as you want. Which is why "utilization" is a misnomer. It's not really how much you utilize the cards, it's what balance appears in your credit reports.
Is this correct? If so, I would likely never really utilize the Macy's CC on a consistent basis but do not want to close it as I would lose the history and result in an effective hit to my FICO or should I / could I close it?
My understanding is that Macy's never closes it. So don't worry about that one.
Finally, do I have to utilize different cards or can I leave them at a $0 balance and just use the ones that benefit me the most with respect to their rewards.
You can use whatever you want. Just be careful about which card you select to be your balance-reporting card.