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Don't know what to pay off first for better credit. Please help!

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Don't know what to pay off first for better credit. Please help!

I just took out a personal (installment) loan and I have $9,000 I can use to pay off my credit debt. At the moment I have three cards I need to pay off, but it seems that AmEX doesn't report to the credit bureau? The three I have to pay off are: AmEX - 26,358.31 / 37898,31 --- VISA - 4369.65 / 5000 --- and another VISA - 3954 / 6500 ... Since it seems AmEX doesn't get calculated into the credit utilization, is it better I pay off the latter two ? I have the AmEX gold card and I pay a minimum on it every month since I use the 'pay over time' feature. It seems I would be able to get my utilization to 0% if I just pay off the two that actually gets factored in... Am I wrong with my calculations? Please help!!

14 REPLIES 14
Valued Contributor

Re: Don't know what to pay off first for better credit. Please help!

Is your Amex new?  They can take a few months to start reporting.  I would pay the 2 smaller cards in full, put the rest towards Amex and then put the money you were using on the Visa's towards your Amex pmt to get it paid off faster.



EQ 679 EXP 700 TU 763
Message 2 of 15
New Visitor

Re: Don't know what to pay off first for better credit. Please help!

No, I had the amex since 2011.

I checked credit karma, and over there, it shows that only two of my VISA cards are being utilized as credit. It's as if the AmEX is not part of it at all... But someone there suggested that my credit utilization is at 100% so I should pay off my amex first before paying off the smaller cards. I think I read somewhere also that AmEX doesn't report at all anymore even as a high balance. Is that true? I am so confused...

Message 3 of 15
Frequent Contributor

Re: Don't know what to pay off first for better credit. Please help!

Your AMEX is a charge card, and is factored differently than revolvers.

 

The question is, why did you charge 26K on that card if you can't pay it? You'll be dead before you pay that off if you are making only the minimum payments with interest on PoT. Not to mention losing all the value of your MR points


Message 4 of 15
Super Contributor

Re: Don't know what to pay off first for better credit. Please help!


@krndreamer wrote:

No, I had the amex since 2011.

I checked credit karma, and over there, it shows that only two of my VISA cards are being utilized as credit. It's as if the AmEX is not part of it at all... But someone there suggested that my credit utilization is at 100% so I should pay off my amex first before paying off the smaller cards. I think I read somewhere also that AmEX doesn't report at all anymore even as a high balance. Is that true? I am so confused...


Hi KMD.  In your first post, you wrote that your AmEX "doesn't report to the credit bureau."   If that is true, it means that the account doesn't appear on your credit reports.  Does the account appear?  Karma should should you your EQ and TU reports.

 

In your latest post it seems as though you may have originally meant that it does report, but that you are guessing that FICO does not count the card as part of its CC utilization factor. 

 

The front end summary page for Credit Karma is a bad way to measure utilization or age-related factors.  Karma's summary page is often wrong.  (Though the reports themselves at Karma are fine.)  Can you tell us more about this Amex card?  Is it a pure charge card, meaning that you are required to pay the balance in full each month -- no option to pay only a part and carry the remainder?

Message 5 of 15
New Visitor

Re: Don't know what to pay off first for better credit. Please help!

@fi-fico-fum Oh no, I pay off minimum + about 500-1000 principal per month. But the minimum seems that it includes part of the principal as well.

Message 6 of 15
New Visitor

Re: Don't know what to pay off first for better credit. Please help!

@creditguyindixie

It was a charge card (had to pay full balance every month) , but opted to use their "pay over time" feature and so now I make minimums and portion of the principal. But the minimums, it seems, includes principal + interest.  I had one of my amazon sponsored (advertisement) fees go out of this card before, but now I changed that over to my business card.

Message 7 of 15
Super Contributor

Re: Don't know what to pay off first for better credit. Please help!

A pure charge card does not count toward utilization in FICO 8. 

 

If I remember contributor and scoring theorist Thomas Thumb right (and he knows a lot about how Amex charge cards work for FICO) once the "pay over time" feature is activated, that may cause the card to be treated by FICO is a normal credit card.  (I.e. to be included in utilization.)  That certainly makes sense since it is indeed acting as a credit card. 

 

TT knows a ton more about this than I do, and I may be misremembering what he said.

Message 8 of 15
New Visitor

Re: Don't know what to pay off first for better credit. Please help!

So then should I just split the $9,000 three ways and lower all the cards credit utilization? because individually all 3 cards are too highly utilized.

Message 9 of 15
Valued Contributor

Re: Don't know what to pay off first for better credit. Please help!


@krndreamer wrote:

I just took out a personal (installment) loan and I have $9,000 I can use to pay off my credit debt. At the moment I have three cards I need to pay off, but it seems that AmEX doesn't report to the credit bureau? The three I have to pay off are: AmEX - 26,358.31 / 37898,31 --- VISA - 4369.65 / 5000 --- and another VISA - 3954 / 6500 ... Since it seems AmEX doesn't get calculated into the credit utilization, is it better I pay off the latter two ? I have the AmEX gold card and I pay a minimum on it every month since I use the 'pay over time' feature. It seems I would be able to get my utilization to 0% if I just pay off the two that actually gets factored in... Am I wrong with my calculations? Please help!!


OPTION 1

VISA - $4369.65 / $5000               Currently sitting at 87%  --> I woul ddo $2,869.65 here which will put you at 30% UTL

VISA - $3954 / $6500                    Currently sitting at 60%  --> I would do $1,954 here which will put you at 30% UTL

 

AmEX - $26,358.31 / $37898,31   Currently sitting at 69%  --> I would do $4,176.35 here which will put you at 58%

You said you're paying $500-$1000 extra per month? You should be able to bring the balance down much more with this big payment.

 

 

OPTION 2

VISA - $4369.65 / $5000               Currently sitting at 87%  --> Pay it off to $0

VISA - $3954 / $6500                    Currently sitting at 60%  --> Pay it off to $0

 

AmEX - $26,358.31 / $37898,31   Currently sitting at 69%  --> Put the rest of the $676.35 here

 

You could pay more on the Visas, maybe to 20% UTL and the rest on the AMEX.  Since you're on the payments option with AMEX, you need to find out if it's reporting a balance or not.  If is not and won't, then you can concentrate on the Visas first.

 

 




FICO 8 Scores EQ 704 / Goal 750, EX 706 / Goal 750, TU 724 / Goal 750

FICO 9 Scores EQ 726 / Goal 750, EX 683 / Goal 750, TU 726 / Goal 750
Message 10 of 15
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