Best Way to Pay Off Credit Cards to Increase Credit Score?

[Anonymous]

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@Shooting-For-800 wrote:

I would pay them down evenly in ratio of utilization.

In other words, the limits matter for each balance.

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OP mentioned in the first post that he's in a position to pay everything off now, so no need to really think about balances/utilization percentages as he can move directly to ideal in one shot.

[Anonymous]

Thank you immensely for your advice. I think I am fairly intelligent yet it is clear that even I had serious misconceptions about credit cards and how the whole thing works regarding how they affect your credit score. 

I do have an additional question. One of the accounts (A Chase Card) is actually closed (unfortunately). The balance is still there due. I am wondering if, since the account is closed, will it automatically go to collections, and if so, should I avoid paying down the balance of it now and wait for it to go to collections whereby I then negotiate the amount down to pay? [I know this is not the kind of question a fiscally responsible individual even has to contemplate, and I am taking steps towards improving]

Thanks for any additional insight you can offer me.

[Anonymous]

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@Anonymous wrote:

Thank you immensely for your advice. I think I am fairly intelligent yet it is clear that even I had serious misconceptions about credit cards and how the whole thing works regarding how they affect your credit score. 

I do have an additional question. One of the accounts (A Chase Card) is actually closed (unfortunately). The balance is still there due. I am wondering if, since the account is closed, will it automatically go to collections, and if so, should I avoid paying down the balance of it now and wait for it to go to collections whereby I then negotiate the amount down to pay? [I know this is not the kind of question a fiscally responsible individual even has to contemplate, and I am taking steps towards improving]

Thanks for any additional insight you can offer me.

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It still does matter and I believe it still can report late even if it has been closed. It will eventually go to collections, maybe not next month, but it will eventually, and then report a CA in addition to the original account, and *really* tank your scores. You may be able to negotiate PFD with them or a settlement amount (but I wouldn't expect much in the immediate with it being so fresh), as usually the biggest discounts come with older derogatory accounts, but it will not remove the train wreck from the original account which will haunt you for 7 years. They also could just choose to sue you for the entire amount. There are a lot of misconceptions that simply closing an account makes any trouble with it disappear.

It does matter. I would pay it much sooner than later and at a minimum, keep paying on it, even if you cannot pay it off.

[Anonymous]

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@Anonymous wrote:

Thank you immensely for your advice. I think I am fairly intelligent yet it is clear that even I had serious misconceptions about credit cards and how the whole thing works regarding how they affect your credit score. 

I do have an additional question. One of the accounts (A Chase Card) is actually closed (unfortunately). The balance is still there due. I am wondering if, since the account is closed, will it automatically go to collections, and if so, should I avoid paying down the balance of it now and wait for it to go to collections whereby I then negotiate the amount down to pay? [I know this is not the kind of question a fiscally responsible individual even has to contemplate, and I am taking steps towards improving]

Thanks for any additional insight you can offer me.

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That is absolute insanity. If you have the money to pay it, do so, and do it now!

If you got a traffic ticket, would you not show up to court and instead wait for an arrest warrant to be issued so you can negotiate a plea?

If you owe taxes and can pay it, would you rather wait until the IRS starts threatening you with levies?

Just read your original post: "Hi all, I am seeking advice on the best course of action to pay off my 3 credit cards that will have the maximum positive impact on my Credit Score."

Under no circumstance will going to collections have any positive impact on your score. EVER

[SouthJamaica]

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@Anonymous wrote:

Thank you immensely for your advice. I think I am fairly intelligent yet it is clear that even I had serious misconceptions about credit cards and how the whole thing works regarding how they affect your credit score. 

I do have an additional question. One of the accounts (A Chase Card) is actually closed (unfortunately). The balance is still there due. I am wondering if, since the account is closed, will it automatically go to collections, and if so, should I avoid paying down the balance of it now and wait for it to go to collections whereby I then negotiate the amount down to pay? [I know this is not the kind of question a fiscally responsible individual even has to contemplate, and I am taking steps towards improving]

Thanks for any additional insight you can offer me.

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Pay it off. As fast as you can.

Negotiating it down will be a long term stain on your credit scores.

[Anonymous]

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@Anonymous wrote:

I do have an additional question. One of the accounts (A Chase Card) is actually closed (unfortunately). The balance is still there due. I am wondering if, since the account is closed, will it automatically go to collections, and if so, should I avoid paying down the balance of it now and wait for it to go to collections whereby I then negotiate the amount down to pay?

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Is the account late yet, or was it just recently closed and you have an upcoming payment?  Pay it off immediately.  You already wrote in your original post that you have the means to pay off all of your CC debt in one shot, so this account should be part of that action.

[Anonymous]

@Anonymous I’ve only got a couple things to add because you’ve been given some wonderful advice upthread.

First off you haven’t told us how what your three cards are nor what your CLs are. You need to post a balance under $100 on a national bankcard with a credit limit under $26,000. The rest of them should post a zero balance for maximum Score.

Now as for the Chase account, you said it’s closed, but has it been chargedoff? What is the reporting delinquency level? You need to pay that as quick as you can and try to talk to them and ask if they can remove or lower the delinquency level, if you have a good excuse for being delinquent. They are a hard cookie but it never hurts to ask.

That is going to hurt your score badly and the longer you let it ride, the worse it’s going to be, because it’s going to continue to suppress your score because they’re probably gonna report monthly.

Best thing to do is pay it off immediately and even if they won’t mitigate the delinquency level, you’ll get points back at 6 months, 12 months, & 24 months of age from the month you pay it off. So, hurry up and pay it off and get that clock ticking!!!!