Help! Which to pay down first?

[Anonymous]

Hi,

In the context of improving credit score for mortage application in next 3 months, should I focus on paying down my 3 cards with above 50% credit utilization or pay off 3 other low balance cards to Zero balance? My FICO 8 scores are

707EX

706EQ

703TU

 and Experian FICO score 2 is 731. I have a total of 10 revolving credit accounts of which 2 cards are at 70% utilization, 1 at 63%, 3 at 50%, 3 at 35% and 1 at 0%. I know that credit utilization has great impact on credit score and DTI is of significance when mortage application is considered. Do I pay down heavily used cards to under 50% thereby lowering minimum payments on them(DTI in focus) or pay off 3 low balance cards to limit number of open accounts with balance? I don't have enough money to pay down all cards at the same time. In my situation which strategy will improve my stand in front of a lender to secure best rate? 

[UncleB]

Hi @Anonymous, and welcome to myFICO!

I've removed your duplicate thread.  Please avoid cross-posting in the future; it's confusing to follow and is against the guidelines here.

--UB

[CGeorge]

If it were me, I would work like all get out to pay down those with the high utilization. I have a personal rule - I never, ever use more than 10% of my credit limit. That is just destructive to your credit. That is just my opinion...best of luck!

[Anonymous]

I would drop the utilization on the highest ones first, then the highest apr balances, and overall total utilization on your available credit should still go down.

[Meanmchine]

If you have a mortgage broker you are working with, give them a call

[Anonymous]

No mortgage broker yet. Trying to improve score as much as I can befor going for preapproval. Thanks!

[Anonymous]

@chrizramiscal, Thank You!

[Anonymous]

@CGeorge Thank You!

[Anonymous]

Dave Ramsey's approach: Pay off your debt from smallest to largest irrespective of interest rates.

Suggestions from other financial guru's: Pay off your debt with the highest % interest rate, then work your way down (regardless of actual debt amounts).

[newmomnewme]

I read here that we should consider the following in no specific order: 

• UTIL thresholds - 88.9, 68.9, 48.9, 28.9 and 8.9 (does these go for both individual AND overall UTIL?) 
• # of accounts with balances vs # of accounts 
•  # of Inquiries 
• DTI (less accounts with balances help this?) 

Depends on how much money you have, how much your balances are, and how long before you app.

I would PIF the smallest ones first (2nd bullet), then use what's left to get the larger ones to the next lower threshold (1st bullet)...like your 50% balances, just need to get under 48.9%. I think if you follow adhere to the first two bullets, the last two aren't worries. 

Best of luck!!