Utilization: Which card should I pay down?

[beezer32]

First, embarassingly I must admit that I have been awful with spending and that my overall utilization over cards is at 51%. I have relied on them too much and haven't paid them down quick enough. I recognize this and am acting to reduce the debt. I should note that my overall utilization is 51% because I have a plethora of reporting TL cards that are under 5% utilized at all times. So the highly utilized cards listed below are balanced out by those lower utilized cards (not listed).

Here are my 30%+ utilized cards by used percentage:

Amazon Store: 79.55%

Barclays Rewards: 71.28%

Cap1 Plat: 71%

Cap 1 QS1: 74.22%

Cap 1 Sony: 68%

I would love some advice about how I should apply a chunk of money that I am getting, towards my credit cards, in order to best effectively lower my utilization. Based on the above, what card(s) should I start pay down quickly in priority order? I thank you in advance for your advice and expertise. =)

[Anonymous]

This one is pretty simple to answer.  Since you are only worried about utilization, not interest rates or any other variables, simply pay down the lowest credit limit cards first.  By doing this, you'll lower your individual card utilizations faster.  Your aggregate utilization will lower at the same rate regardless of which card(s) you pay down as total dollars are all that matters.

If I were you, I'd set my first goal of getting all cards to 49%.  The second goal after that should be getting all to 29%.  Once you are there, you'll be in a far better place than you are now.

Aggregate utilization is far more important than individual card utilization, so spending too much time worry about individual card utilization may be overthinking things.  Perhaps some of the veterans on here can chime in as to what's "better" for scoring with respect to utilization... such as getting all 5 of your high utilization cards to 49%, or taking say two of them down to $0 first while leaving the other 3 at their ~70% utilizations, etc.  I would tend to think that there wouldn't be a significant difference either way as the benefit you get from lowering one or two down significantly would be countered by still having several with very high utilization.

If you could go ahead and list your balances / limits on the 5 cards in question we can give you a better plan.  Starting with the lowest limit cards though will give you the quickest scoring impact.  Remember that FICO doesn't care if a card has a $500 limit or a $5000 limit; 70% utilization on both is 70% utilization.  Certainly, taking 70% utilization down to 49% or 29% or 0% on a $500 card is far easier than taking down 70% utilization on a $5000 card, and the scoring impact with respect to individual card utilization will be the same.

[SouthJamaica]

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@beezer32 wrote:

First, embarassingly I must admit that I have been awful with spending and that my overall utilization over cards is at 51%. I have relied on them too much and haven't paid them down quick enough. I recognize this and am acting to reduce the debt. I should note that my overall utilization is 51% because I have a plethora of reporting TL cards that are under 5% utilized at all times. So the highly utilized cards listed below are balanced out by those lower utilized cards (not listed).

Here are my 30%+ utilized cards by used percentage:

Amazon Store: 79.55%

Barclays Rewards: 71.28%

Cap1 Plat: 71%

Cap 1 QS1: 74.22%

Cap 1 Sony: 68%

I would love some advice about how I should apply a chunk of money that I am getting, towards my credit cards, in order to best effectively lower my utilization. Based on the above, what card(s) should I start pay down quickly in priority order? I thank you in advance for your advice and expertise. =)

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There are 3 factors to consider:

1. number of cards reporting a balance

2. individual utilization

3. aggregate utilization

1. Don't neglect point 1. It's best to have >50% of your cards reporting a zero balance. So if you have more than 50% of your cards reporting a balance, even a tiny balance, you may want to zero some of fhose out to get under 50%.

2. Then try to get each high balance card under 50%, then under 30%.

3. Then try to get overall utilization under 30%.

[Anonymous]

I agree, utilize the snowball effect. Pay lowest balance card off first then use the money that is freed up from payments to pay off the next lowest as so on untill they are all done.