High utilizations on my cards, which to pay first?

[Anonymous]

I am a newbie to this, so forgive my question. My credit score isn't that great, I have only gotten my transunion fico score through myfico quarterly monitoring. It is 677.

What is hurting me is high utilizations on my cards... I am now in a better position to pay some of these down, and hope for some score increases.

My question is, which cards should I pay down 1st, or does it matter? Here is where I am currently at:

Dell I owe 2410 vs. a limit of 3000

hhbank card I owe 444 vs. a limit of 500

Sears MC I owe 1386 vs. a limit of 1400

JC Penney I owe 1164 vs. a limit of 1650

Kohl's I owe 895 vs. a limit of 1000

Kays I owe 48 vs. a limit of 4900

Sams Club 444 vs. a limit of 500

Lowes I owe 1640 vs. a limit of 1760.

Thank you for any advice.

[BungalowMo]

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@Anonymous wrote:

I am a newbie to this, so forgive my question. My credit score isn't that great, I have only gotten my transunion fico score through myfico quarterly monitoring. It is 677.

What is hurting me is high utilizations on my cards... I am now in a better position to pay some of these down, and hope for some score increases.

My question is, which cards should I pay down 1st, or does it matter? Here is where I am currently at:

Dell I owe 2410 vs. a limit of 3000

hhbank card I owe 444 vs. a limit of 500

Sears MC I owe 1386 vs. a limit of 1400

JC Penney I owe 1164 vs. a limit of 1650

Kohl's I owe 895 vs. a limit of 1000

Kays I owe 48 vs. a limit of 4900     PIF!  This is super low, easy to do.

Sams Club 444 vs. a limit of 500

Lowes I owe 1640 vs. a limit of 1760.

Thank you for any advice.

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As far as the others go... pay more than the minimumon ALL each month & throw the xtra $$ you have on the cc's with the highest int rate. Look at the statements & see whch ones have the largest $$ for interest tacked on.  That is the one or 2 you want to start with.

Your FICO isn't bad at all!  Pay those down & you will be the Golden Child in your creditors eyes!!!

[RobertEG]

As you know, next to maintaining a history of no missed payments, % util is one of the biggest impacts on your score.  Having such a high % util, I think your score is excellent.

And % util is the one FICO factor that has no past memory, so you have excellent potential for a substantial score increase.

FICO scores % util on three factors.  About half is based on overall % util, and the remaining half is a mix of looking at % util on each card and the percent of total cards showing a balance.

Your overall % util is close to 60%, with 6 of your 8 cards at 80% or above, and three over 90%, with a balance being reported on 100% of your cards.  Big hurt in all three factors.

At this point, I don’t think it matters a lot from a FICO perspective which card you pay first.  Getting your overall % util well under 50% would be my focus.

So I would approach my immediate payment strategy based more on financial rather than FICO concerns.  What is the interest rate on each card, and how much goes to interest each month?  I would focus on the cards that are costing you the most each month.  Dell stands out as your highest balance, and would get my first attention. Then Lowes and Sears. Are these high interest rate cards?

Also keep in mind that high % util may result in the creditor reducing your CL.  Existing creditors have the right to pull your CR for periodic review of your current credit status, and adjust your CL accordingly.

Your three highest CL cards are Kay, Dell, and Lowes.  Kay is at 1% util, so would not be my focus.  No immediate advantage to PIF on Kay.  Dell is at 80%, and is one I would pay down first, not only to reduce monthly interest, but to protect its CL, which is your 2nd highest.  Sears is at 99% util, but its CL is 5th on your list. Lowes is at 93% util, and is your third highest CL card.

In summary, I would first concentrate on Dell, then Lowes, then Sears.

Just my opinion.

Message Edited by RobertEG on 11-15-2009 02:37 PM

Message Edited by RobertEG on 11-15-2009 02:46 PM

[RobertEG]

I have one more thing that you might want to chew on.

Your total revolving debt is approx. $8400.

I dont know what other debt you have, and your overall financial status, but would presume that the interest rate on your CCs is well over 12%.

Have you considered a personal installment loan from a low interest rate lendor, such as your credit union, for about $5000 at a raqte of less than half of your CC interest rates? That would reduce your revolving % util to around 20%, and % util on installment loans are not scored high in FICO.

That would add an installment loan to your credit mix, substantially reduce your % util of revolving credit, improve your credit mix, and reduce the money out of pocket each month.

[Anonymous]

Thank you everyone for the replies. All of these carry a high interest rate as I have been collecting the rate jack letters,  but I have chosen to keep the accounts and not opp out, I just want to pay them down and off yet use them sparingly and keep them open. The Lowes account already saw a CLD, it used to be 2250 and then they dropped me to 1760.

I am happy to be here and have been reading many of the older threads and taking in much information, I just have alot to learn and to stop being foolish with my credit, though I haven't had any late payments, just ran up the balances, now it's time to run them down. I asked the original question wondering if it made sense to attack a certian card over the others, in my unkowing mind I was thinking the Sears MC since it is so close to the limit.(not pay it off initialy but rather dump a quick 200 or so into it to make some distance between whats owed and the limit).. But since the general feeling is that it doesn't matter, I may tackle the smaller 500 limits, I think I need to get some early victorys to keep me focused and going strong, even though that means paying more interest on the higher balances for longer.

[RobertEG]

I hear what you are saying, but dont agree.

The low CL cards (HSBS and Sams) are costing you, combined, less than half of the Dell card monthly interest, for example.

And losing CL on those cards wont matter much.

They would be the last two I would focus on.

But you have focus, and overall % util will improve, no matter which you pay first.

Good luck!

[Anonymous]

I"ll add another option.

If you get as many cards as possible down to a 0 balance, you will get the same overall utilization, plus fewer cards carrying a balance (FICO dings you for too many cards carrying a balance - it's Reason Code #5 for all 3 CRA's).   That would mean paying off the smallest balance cards first.  Once over half of your accounts do not have a balance, you can switch into the mode of paying off highest interest rates.

Good luck to you on your excellent plans to pay down your balances.

[Anonymous]

I have used this extensively - as well as recommended it to others.  It's a great tool to figure out what to pay first, and to show your progress.  And it's free

http://www.vertex42.com/Calculators/debt-reduction-calculator.html