Paying down credit card debt

[Anonymous]

I have 3,000.00 dollars and I need to pay down my debt.  How should I utilize the money with the two cards in order to boost my FICO score?  Also, the credit cards both report balances right around the 8th of the month.  Will it help my FICO score right away?

Bank of America:  5,000.00 Balance with a 8,500.00 dollar limit

Chase:                 2,499.00 Balance with a 5,000.00 dollar limit

Thanks in advance for your help and this forum is wonderful.

TheTaxMan

[Anonymous]

Pay off the Chase card completely.  This will reduce the number of revolving accounts showing a balance down to 1, which will help your UTIL... assuming you had three revolving accounts.  With only two revolving accounts, you can't optimize UTIL (because of two competing issues:  you want at least some small balance on less than half of your revolving accounts.  But less than half of two cards is... zero).

Since the amount owed on all revolving acounts is added together to determine utilization, it wouldn't help to split the $3000 between the two cards.

If you apply the remaining $500 to your BoA, that will leave you with only a $4,500 balance on the BoA card and a total of $13,500 available credit between the two cards.  This gives you a 33% UTIL (the lower, the better. tho you'll prob see the most benefit to your score if you get that down to less than 10%).

Assuming your CRs are updated on the closing date (and I think Chase and BoA are pretty good about that), I think you should see some improvement after the later closing date.

 [Edited to expand on first paragraph]

Message Edited by writemikep on 11-01-2008 01:37 PM

[Anonymous]

They report your last statement balance on that date.....meaning they will report it around the 8th after your next statement balance is issued.

I recommend you put 2k towards BoA (putting you under 40 percent util) and 1k toward Chase. But I think your score won't vary too much no matter how you allocate it. Thus, I recommend you consider the APR on both cards before making your choice. Put the most towards the higher APR.

[Anonymous]

I paid off a BofA CC that had a $4006.29 balance on 29Aug08. On 08Sep08, my EQ FICO was 653. On 20Sep08, I received a text from ScoreWatch stating that my score had increased by 47 points to 700. I thought about distributing the funds between a couple of cards but since the Anne Geddes card had a higher APR, I paid that one off. In the hindesight, I would have split the funds between the 2 BofA accounts.

EQ FICO: 705

*Anne Geddes (issued by BofA):0/4200

Chase:0/1400

Babies 'R' Us:0/500

Cap1:0/750

*BofA:8844/10500

BestBuy: 2300/3300 at 0% until 10/09

[Cleanmachine]

With all due respect to the other posters, I disagree.

 

Unless you are currently in the Market to purchase a home, especially in today’s economic crises, I would suggest that you place these funds in savings or money market account that you have access to in case of an emergency.

 

Without having additional information as to your goal, it is difficult to say for certainly what would benefit you the most.

 

A Bank of America and Chase report to the Credit Bureau’s in most cases the day after closing date.

[GFer]

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@Cleanmachine wrote:

With all due respect to the other posters, I disagree.

 

Unless you are currently in the Market to purchase a home, especially in today’s economic crises, I would suggest that you place these funds in savings or money market account that you have access to in case of an emergency.

 

Without having additional information as to your goal, it is difficult to say for certainly what would benefit you the most.

 

A Bank of America and Chase report to the Credit Bureau’s in most cases the day after closing date.

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Depends on what the interest rates are for the cards. It wouldn't make financial sense to save money at say 3-4% if you are carrying balances at any rate above those of the cards.

[Anonymous]

And it is pretty hard to find a 3-4% return on a few thousand dollars. Most money markets require 10k at a minimum to pull near 4%. Regular savings accounts are yielding 1 percent. Even low APR's are likely to be 5 or higher.

[Anonymous]

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@GFer wrote:

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@Cleanmachine wrote:

With all due respect to the other posters, I disagree.

 

Unless you are currently in the Market to purchase a home, especially in today’s economic crises, I would suggest that you place these funds in savings or money market account that you have access to in case of an emergency.

 

Without having additional information as to your goal, it is difficult to say for certainly what would benefit you the most.

 

A Bank of America and Chase report to the Credit Bureau’s in most cases the day after closing date.

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Depends on what the interest rates are for the cards. It wouldn't make financial sense to save money at say 3-4% if you are carrying balances at any rate above those of the cards.

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And, let's not forget that this is not a good time to be carrying high balances on credit cards. Creditors are getting nervous and chopping limits left and right. When they chase the balance down like that it can sabotage your credit score. As your scores go down, your other creditors get nervous and  it causes a horrible domino effect. In this economy, I'd do whatever I could to pay down my debt. Our credit scores are more important now that then ever...