@kmacqua wrote:
I know I need to reduce my util % to improve my credit scores. Lingering high balances have been a killer. I'm soon going to be in a position to make a large lump payment to lower the balance substantially and I'm not sure which of 2 cards I should put it toward. Any thoughts on which would improve my score most?
Card 1: Balance $6500, original CL $11,200. Closed by grantor. Perfect payment history (just above minimum).
Card 2: Balance $8750, CL $16000. Open account, perfect payment history (approx 5x minimum).
Other cards: Balance $0-200, combined CLs roughly $11,000, perfect payment history
Card 2 is a joint card and one benefit about lowering that balance is that it would lower both our util rates
Card 1 is closed, and while a closed account with a balance can't look good on my report, I've heard conflicting info on how a closed account is considered in calculating the util rate. Is its contribution to my total util rate 6500/0 or 6500/11200? If I pay it to 0, do I lose credit for the $11,200 in the denominator? If so, should I pay it way down but leave a little something on it?
Or does it not matter as long as I pay money somewhere? (In which case I'll pay toward the higher APR)
Thanks in advance,
Confused in credit
The closed account's contribution to your util is 6500/0. Once the account is closed the CL is no longer counted, only the balance.
It may be a more helpful in the short run from a credit score standpoint to pay off the closed account first. However, I would still pay off the highest APR first. It will get you out of debt the fastest. Until your utilization is down on all of the cards, your credit score will still be hurting you. However, once util is fixed, it is like it never happened. I would not be applying for any new credit until my utilization was down, therefore, my credit score wouldn't matter while I am paying down my debt.
On the other cards you have, I would think about trying to PIF on all of them. It would give you a grace period with no interest for your required bills. In addition, it would reduce the tempation to let the other CC balances increase while you pay down the worst two.
