Have to carry a CC balance for the first time... how can I reduce the hit to my credit score?

[Anonymous]

I've been rebuilding my credit with a lot of success over the past 6 months or so, but in July my ex-husband abruptly stopped paying child support and I lost both the home I was purchasing and also a huge part of my monthly income. He apparently was finally just garnished by the state, so I'll get backpay in the next month or so, but for now my CCs are going to report a balance. I really want to minimize the hit to my credit and I'm not sure how best to do that.

Here are all of my CCs and their current balance:

Cap One: $720 (limit $800)

Credit One: $210 (limit $500)

FNBO: $1000 (limit $1400)

Amazon: $144 (limit $800)

Wayfair: $350 (limit $2500)

Target: $0 (limit $300)

Kohls: $0 (limit $600)

Pottery Barn: $0 (limit $2500)

Old Navy: $0 (limit $300 I think)

I only have another $500 to put toward my CCs this month. If I get anything more, I'll add it, but this is my max right now. Wayfair is my lowest priority and I have been just paying $50 a month on that one to slowly pay it off. Amazon won't even post until next month so that's not a concern at all. So, of the three actual CCs, how should I distribute the $500 to have the least impact on my credit score? Should I pay Credit One down to $0 and then take the other $300 and split it among the other two? Should I pay Credit One to zero and then get Cap One down to below 50%? That's kind of my thought right now... that having one at zero, and one at 50% is best. Anything I'm missing?

Thanks!

[Anonymous]

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@Anonymous wrote:

I've been rebuilding my credit with a lot of success over the past 6 months or so, but in July my ex-husband abruptly stopped paying child support and I lost both the home I was purchasing and also a huge part of my monthly income. He apparently was finally just garnished by the state, so I'll get backpay in the next month or so, but for now my CCs are going to report a balance. I really want to minimize the hit to my credit and I'm not sure how best to do that.

Here are all of my CCs and their current balance:

Cap One: $720 (limit $800)

Credit One: $210 (limit $500)

FNBO: $1000 (limit $1400)

Amazon: $144 (limit $800)

Wayfair: $350 (limit $2500)

Target: $0 (limit $300)

Kohls: $0 (limit $600)

Pottery Barn: $0 (limit $2500)

Old Navy: $0 (limit $300 I think)

I only have another $500 to put toward my CCs this month. If I get anything more, I'll add it, but this is my max right now. Wayfair is my lowest priority and I have been just paying $50 a month on that one to slowly pay it off. Amazon won't even post until next month so that's not a concern at all. So, of the three actual CCs, how should I distribute the $500 to have the least impact on my credit score? Should I pay Credit One down to $0 and then take the other $300 and split it among the other two? Should I pay Credit One to zero and then get Cap One down to below 50%? That's kind of my thought right now... that having one at zero, and one at 50% is best. Anything I'm missing?

Thanks!

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100% pay off Credit One first.  With no grace period, they're already charging you interest so it'll save you the money.  After you pay Credit One off, next use the money to pay down the balance on the highest APR to save a bit more money.  That's more important than the hit to your credit score for having to carry a balance temporarily, since utilization doesn't have a memory and once you get your balances paid down / off your score will rebound.

[Dalmus]

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@Anonymous wrote:

I've been rebuilding my credit with a lot of success over the past 6 months or so, but in July my ex-husband abruptly stopped paying child support and I lost both the home I was purchasing and also a huge part of my monthly income. He apparently was finally just garnished by the state, so I'll get backpay in the next month or so, but for now my CCs are going to report a balance. I really want to minimize the hit to my credit and I'm not sure how best to do that.

Here are all of my CCs and their current balance:

Cap One: $720 (limit $800)

Credit One: $210 (limit $500)

FNBO: $1000 (limit $1400)

Amazon: $144 (limit $800)

Wayfair: $350 (limit $2500)

Target: $0 (limit $300)

Kohls: $0 (limit $600)

Pottery Barn: $0 (limit $2500)

Old Navy: $0 (limit $300 I think)

I only have another $500 to put toward my CCs this month. If I get anything more, I'll add it, but this is my max right now. Wayfair is my lowest priority and I have been just paying $50 a month on that one to slowly pay it off. Amazon won't even post until next month so that's not a concern at all. So, of the three actual CCs, how should I distribute the $500 to have the least impact on my credit score? Should I pay Credit One down to $0 and then take the other $300 and split it among the other two? Should I pay Credit One to zero and then get Cap One down to below 50%? That's kind of my thought right now... that having one at zero, and one at 50% is best. Anything I'm missing?

Thanks!

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 Pay off Credit One, and then pay $10 above the minimum for the rest.

 You score will take a hit for only as long as the balances report.  As long as you don't have a late, your scores will bounce back as soon as you pay off those balances.

[SouthJamaica]

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@Anonymous wrote:

I've been rebuilding my credit with a lot of success over the past 6 months or so, but in July my ex-husband abruptly stopped paying child support and I lost both the home I was purchasing and also a huge part of my monthly income. He apparently was finally just garnished by the state, so I'll get backpay in the next month or so, but for now my CCs are going to report a balance. I really want to minimize the hit to my credit and I'm not sure how best to do that.

Here are all of my CCs and their current balance:

Cap One: $720 (limit $800)

Credit One: $210 (limit $500)

FNBO: $1000 (limit $1400)

Amazon: $144 (limit $800)

Wayfair: $350 (limit $2500)

Target: $0 (limit $300)

Kohls: $0 (limit $600)

Pottery Barn: $0 (limit $2500)

Old Navy: $0 (limit $300 I think)

I only have another $500 to put toward my CCs this month. If I get anything more, I'll add it, but this is my max right now. Wayfair is my lowest priority and I have been just paying $50 a month on that one to slowly pay it off. Amazon won't even post until next month so that's not a concern at all. So, of the three actual CCs, how should I distribute the $500 to have the least impact on my credit score? Should I pay Credit One down to $0 and then take the other $300 and split it among the other two? Should I pay Credit One to zero and then get Cap One down to below 50%? That's kind of my thought right now... that having one at zero, and one at 50% is best. Anything I'm missing?

Thanks!

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I would pay 65 to Credit One & 435 to Cap One.

[Anonymous]

Do Not worry about your scores from temporary util, your scores will bounce right back the next statement when they are paid off. Just payy off which ever is going to cost you the most to carry a ballance. eg. Highest APR card w/ biggest balance. And work your way down. 

[happypill]

If score is your primary concern, pay down your Capital One card first.  The fact that it is 90% util is the biggest negative factor among the data you shared.  It would also help if you paid FNBO down below 50% util as well, but it doesn't sound like you have enough cash at the moment to do that at the moment.

Once you get your cards down below 50% util (soon it looks like), just target the ones with the highest APR and go from there.

[Anonymous]

Honestly, your focus should be on paying the least amount of interest. You don't have to micromanage your FICO scores right now or ever but that's a personal choice. As others mentioned, pay as much as you can on the credit card charging you the most interest. Breathe... It will be okay. Stay positive!