paying off high usage

[rideco]

OK so I have perfect payment history, high total age of accounts, 0 hard pulls but my CC usage has sky rockected.   Yes I know I was dumb to get back in that situation but I have decided to bite the bullet and have figured out a way to pay back about 2/3's of my total usage.   My credit score was 800 and now its much lower even with perfect payments. What I would really like to do is payoff the accounts without having my credit limits lowered after paying them back.  I cant decide if I should tackle them from highest intrest to lowest or from highest balance to lowest.  I have the usual suspects Citi, AMEX, Discover, CapOne, Chase.    Part two of my plan for the remaing 1/3 is to get my credit score back to 750+ after lowing my usage and then see if I can get a balance transfer card and then attack that at low intrest. No other credit requests until the low intrest period runs out.  Rince and repete.   Thoughs...   

[Horseshoez]

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@rideco wrote:

OK so I have perfect payment history, high total age of accounts, 0 hard pulls but my CC usage has sky rockected.   Yes I know I was dumb to get back in that situation but I have decided to bite the bullet and have figured out a way to pay back about 2/3's of my total usage.   My credit score was 800 and now its much lower even with perfect payments. What I would really like to do is payoff the accounts without having my credit limits lowered after paying them back.  I cant decide if I should tackle them from highest intrest to lowest or from highest balance to lowest.  I have the usual suspects Citi, AMEX, Discover, CapOne, Chase.    Part two of my plan for the remaing 1/3 is to get my credit score back to 750+ after lowing my usage and then see if I can get a balance transfer card and then attack that at low intrest. No other credit requests until the low intrest period runs out.  Rince and repete.   Thoughs...   

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The common adage around here is "Finances over FICO", and by that we mean, do what means the best financial sense, and let your FICO scores do what they will.  Once you've gotten your finances in order, high scores will quickly follow.

Assuming you follow that plan, pay down your highest interest cards to zero, one by each, and when you get to the last one, pay it down to say, $25 and then let it report a small balance each month.  Doing this will give you maximum scores.

Regarding balance chasing/adverse actions, if one of your creditors does that, shove the card in a sock drawer and apply for something better.

[SouthJamaica]

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@rideco wrote:

OK so I have perfect payment history, high total age of accounts, 0 hard pulls but my CC usage has sky rockected.   Yes I know I was dumb to get back in that situation but I have decided to bite the bullet and have figured out a way to pay back about 2/3's of my total usage.   My credit score was 800 and now its much lower even with perfect payments. What I would really like to do is payoff the accounts without having my credit limits lowered after paying them back.  I cant decide if I should tackle them from highest intrest to lowest or from highest balance to lowest.  I have the usual suspects Citi, AMEX, Discover, CapOne, Chase.    Part two of my plan for the remaing 1/3 is to get my credit score back to 750+ after lowing my usage and then see if I can get a balance transfer card and then attack that at low intrest. No other credit requests until the low intrest period runs out.  Rince and repete.   Thoughs...   

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In my opinion the best way is to (a) make sure everything is down to 78% or less, and then (b) go from lowest balance to highest balance... i.e. the "snowball" method.

Snowball method.
1. Stop using cards.
2. Pay off smallest balance first, then next smallest, and so on.
3. On other cards pay minimum + something each month.
As each balance turns to zero, that will free up your remaining monthly cash to apply to the next smallest balance.

[ptatohed]

We need a sticky on this topic.  @Horseshoez is exactly right.  At this point, don't worry about your credit scores.  Focus on paying that debt off quickly and less costly.  This will always be directing the majority of your payment(s) to the highest interest rate(s).  This will pay of your debt in a shorter time and cost you less money.  

But that's step 3.  Step 1 is stop using your cards.  Step 2 is doing what you can to reduce your interest rates.  

[JoeRockhead]

I'd agree that the first thing you should focus on, to help avoid adverse action, would be to get any accounts that are maxed out to under 78% UTI. From there, I'm more in favor of going after the accounts that are costing the most in interest first, and work from there. BUT, only if you can throw significant funds at wiping the debt out, fast (otherwise, by extending the payoff of the smaller accounts too long, the interest can start adding up big). If not, I'd recommend the snowball method and wipe out the smaller debts, then taking the extra money and applying it to the next biggest, and so on, as described up thread.  

I'd also agree to stop worrying about your scores right now. Utilization has no memory, so as your balances come down, your score will go up again. 

[rideco]

Yep I get it.  I am not too stressed about my score to be honest.  I just need to get this debit paid down and things will work themselves out.

Thanks for the advice!!

[rideco]

78% usage great to know that number.  Thanks

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[rideco]

Yep Thanks!!! 

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@ptatohed wrote:

We need a sticky on this topic.  @Horseshoez is exactly right.  At this point, don't worry about your credit scores.  Focus on paying that debt off quickly and less costly.  This will always be directing the majority of your payment(s) to the highest interest rate(s).  This will pay of your debt in a shorter time and cost you less money.  

But that's step 3.  Step 1 is stop using your cards.  Step 2 is doing what you can to reduce your interest rates.  

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[FicoMike0]

Good luck!

[Anonymous]

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@JoeRockhead wrote:

I'd agree that the first thing you should focus on, to help avoid adverse action, would be to get any accounts that are maxed out to under 78% UTI. From there, I'm more in favor of going after the accounts that are costing the most in interest first, and work from there. BUT, only if you can throw significant funds at wiping the debt out, fast (otherwise, by extending the payoff of the smaller accounts too long, the interest can start adding up big). If not, I'd recommend the snowball method and wipe out the smaller debts, then taking the extra money and applying it to the next biggest, and so on, as described up thread.  

I'd also agree to stop worrying about your scores right now. Utilization has no memory, so as your balances come down, your score will go up again. 

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I don't understand the motivation here: why use avalanche only if you can make a big dent fast?  You say that extending the payoff of smaller accounts will cause extra interest, but not paying off higher interest accounts can also cost more

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