Where to pay?

[Tiz]

I'm getting the same info from Nerd Wallet and Credit Karma that if I pay down my CC balances by $800 my score should go up by 53 pts. Should I just pick a card with the highest rate or is there some preferred accounts to pay? 2 cards are at over 60% utilization but have much lower interest rates than others that carry less percentage of use >20% but have almost double the interest. : o

[AverageJoesCredit]

Id pay the cards with high utilization. I know the more interest you pay is bad but if you arent going to pay anything off with the $800, id prefer to see lower Util. Just me though

[SomewhereIn505]

AJC is right. The ones with the highest utilization should be paid down first to better impact your scores.

[K-in-Boston]

For scoring purposes, paying down the ones with the highest utilization is better. For financial reasons, paying down the ones with the highest interest rate is better.

Also very important to note that simulators on credit sites are notoriously unreliable, and increasing a FAKO score doesn’t necessarily increase a FICO score. While you should see improvement from paying down to under 30% utilization across the board, it’s doubtful that the increase would be anywhere near what the simulator is giving.

[Tiz]

I know those simulators are guesses but since credit karma is a product of a credit scoring service you'd hope their model would be somewhat accurate. Also, the Nerdwallet simulator was within a couple points of the credit karma simulator. Now that's not to say the nerdwallet simulators engine is not somehow tied to the credit karma simulator. It's hard to separate one site from other as they are all part of a credit reporting system that feeds into itself, or more accurately feeds us into it. *X-Files music starts* 😂

[marty56]

A non-FICO/credit score plan is to use the DMP/debt snowball approach where you make in mimum payments on all cards except the one with the smallest balance and pay as much as you can until it is PIF and then the next one until you are PIF across the board.  Best way to get out of CC debt and it worked for me.

[HeavenOhio]

Oftentimes, people have to choose between snowballing (as marty56 mentions) and paying the high-interest cards first. In this case, the snowball cards and the high-rate cards are the same ones.

One area in which FICO rewards/penalizes you is for the percentage of cards reporting non-zero balances (as long as it isn't all cards reporting zero). You may see a score gain by starting off with the two lower-balance cards. You'll still have two cards with relatively high utilization. But overall utilization will still go down by the same amount either way, and you'll have two fewer cards reporting non-zero balances.

Note that Credit Karma and many other sites use scores other than FICO. Credit Karma offers VantageScores, which are used by no lenders that we know of here. In other words, ignore their scores, and concentrate on the information in their nicely laid out credit reports.

[Anonymous]

Back in the day, CK was good for one thing and one thing only!  I contact USAA's financial services and they tell me my lending score over the phone.

[Tiz]

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@marty56 wrote:

A non-FICO/credit score plan is to use the DMP/debt snowball approach where you make in mimum payments on all cards except the one with the smallest balance and pay as much as you can until it is PIF and then the next one until you are PIF across the board.  Best way to get out of CC debt and it worked for me.

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Sound advice my friend.

[HeavenOhio]

If your two more highly utilized cards were in maxed out territory, I think it'd be important to bring those balances down. But since they aren't, I'd snowball the high-interest cards.

I'd suggest paying more than the minimum on the other cards, though. For a month, you're OK, but lenders like to see progress toward paying down your debt. If paying the minimum helps you pay off your low balance cards, that's fine. But I'd start paying at least two or three times the minimum on your other cards ASAP.

Note that all of us are giving advice without knowing your actual balances and limits or knowing what your budget is going forward. If you think you're going to be able to continue to bring down your debt, the advice you've gotten so far is likely fine. But if there might be issues, posting the additional info might help us to help you better.