30% utilization overall or majority of cards?

[Anonymous]

Hello!

My current revolving credit utilization is 92%. I have the following balances on my cards:

My question is this: I recently came into $8k in cash and want to pay down my debt. Without considering different debt reduction stratigies, I just want to know the following: if I put this $8k toward my credit cards it will reduce my revolving utilization to 66%. Would it be bnenefical to pay enough to bring the majority of my cards to 30% utilization, or pay off some cards so they have no balance. Wondering which would help my credit score more.

Credit Line	Current Balance
$   1,500.00	$   1,578.31
$   1,200.00	$   1,198.39
$   4,900.00	$   2,649.26
$   7,500.00	$   7,750.84
$ 10,200.00	$ 10,240.56
$   1,200.00	$   1,009.54

[SouthJamaica]

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@Anonymous wrote:

Hello!

My current revolving credit utilization is 92%. I have the following balances on my cards:

My question is this: I recently came into $8k in cash and want to pay down my debt. Without considering different debt reduction stratigies, I just want to know the following: if I put this $8k toward my credit cards it will reduce my revolving utilization to 66%. Would it be bnenefical to pay enough to bring the majority of my cards to 30% utilization, or pay off some cards so they have no balance. Wondering which would help my credit score more.

Credit Line	Current Balance
$   1,500.00	$   1,578.31
$   1,200.00	$   1,198.39
$   4,900.00	$   2,649.26
$   7,500.00	$   7,750.84
$ 10,200.00	$ 10,240.56
$   1,200.00	$   1,009.54

---

Spread it around. Get each card to 66%.

[Anonymous]

Thanks! Can you tell me what the benefit of spreading it out might be?

I was thinking that having some cards paid off would be better than having them all at 66%. No matter how I slice it  up my overall utilization will be 66%. 

[Phana24]

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@Anonymous wrote:

Hello!

My current revolving credit utilization is 92%. I have the following balances on my cards:

My question is this: I recently came into $8k in cash and want to pay down my debt. Without considering different debt reduction stratigies, I just want to know the following: if I put this $8k toward my credit cards it will reduce my revolving utilization to 66%. Would it be bnenefical to pay enough to bring the majority of my cards to 30% utilization, or pay off some cards so they have no balance. Wondering which would help my credit score more.

Credit Line	Current Balance
$   1,500.00	$   1,578.31
$   1,200.00	$   1,198.39
$   4,900.00	$   2,649.26
$   7,500.00	$   7,750.84
$ 10,200.00	$ 10,240.56
$   1,200.00	$   1,009.54

---

Well, you can bring the two smaller accounts under 30%, and still get all the others under 70%.  Remember, FICO rounds off, so get accts down to 28.8 and 68.8 to be sure you don't get rounded up.  That's probably going to maximize your scoring benefit.   I'm not a scoring expert, hopefully one of the scoring gurus can weigh-in on you best move, but if I were you, that's my strategy.  FYI, be careful allowing a balance above the CL, many institutions will penalize you for having a balance over the CL for some time in the event you want a CLI in the future.  Also, if one of the larger accounts has a much lower APR, it may be worth it for you to take the hit on your FICO and pay off the higher APR cards first.  You didn't mention your current scores, but you should be looking to refi this debt if possible. 

[pakratus]

Unless you are looking for more credit (new card or loan), I wouldn't focus on utilization.  Anything you can pay off will likely help your util and score.

I would say there are two strategies-

Pay off the higher APR cards so you're paying more towards the actual debt, not just treading water.

Pay off more cards overall so you can focus on paying down the two higher balances.

I would consider paying off the 4 lower balances.

EDIT to add- Pay down any balances that are over your limit also

[SouthJamaica]

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@Anonymous wrote:

Thanks! Can you tell me what the benefit of spreading it out might be?

I was thinking that having some cards paid off would be better than having them all at 66%. No matter how I slice it  up my overall utilization will be 66%. 

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Reasons:  (a) getting your FICO 8's and 9's improved and (b) trying to avoid adverse action by the lenders. The longer you have maxed out cards, the longer you're in danger of your credit limits being reduced, which will squeeze you further. And the FICO 8's and 9's benefit from lower utilization across the board.

Anyone who's talking to you about interest rates is missing the big picture.  That's for people who have breathing room. You presently have none.  My advice is intended to get you some, if it's not already too late.

[RSX]

^^ agreed - the biggest concern here is the 2 over limit - and the others that are close to it

you may start to get balance chased on one or more of these cards (i hope not)

here is what i would do as soon as i had the $8k - make the first payments on the Bolded items 

after that - start paying off the smallest to largest debt in order

CreditLine	Current Balance	Current %	PayDown	NewAmount	New %
1500	$   1,578.31	105	573	1005	0.67
1200	$   1,198.39	99.8	394	804	0.67
4900	$   2,649.26	54	297	2352	0.48
7500	$   7,750.84	103	2725	5025	0.67
10200	$ 10,240.56	100	3406	6834	0.67
1200	$   1,009.54	84	205	804	0.67
		Total	7600

[Anonymalous]

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@SouthJamaica wrote:

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Anyone who's talking to you about interest rates is missing the big picture.  That's for people who have breathing room. You presently have none.  My advice is intended to get you some, if it's not already too late.

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Though once some of that debt is paid down, it wouldn't be a bad time to look into a credit consolidation loan (talk to a credit union). Credit cards are generally the worst place to keep debt.

But @Anonymous, this is not the time to worry about your credit score. At all. Utilization has no memory, so once your credit lines are under control, it'll bounce back. But in the meantime, only a credit consolidation loan should be on the table. You're in no position to apply for a mortgage, and you shouldn't even consider a new card until things are under control. You need to take action to stave off adverse actions from your current creditors, and then come up with a plan to pay down that debt.