Question about payind down CC debt and decreasing utilization ratio

[Anonymous]

Is is better to try and pay of my balances as quickly as possible or pay them off a little bit at a time over a longer period of time?

I currently owe $1200.00 on $6300.00 of credit. The myfico simulator suggests that paying $47.00 per month for 24 months would boost my credid tremendously. But when I adjust it to paying it all off at once their is only a small gain. I'm confused!!

Any advice would be appreciated

[SouthJamaica]

---

@Anonymous wrote:

Is is better to try and pay of my balances as quickly as possible or pay them off a little bit at a time over a longer period of time?

I currently owe $1200.00 on $6300.00 of credit. The myfico simulator suggests that paying $47.00 per month for 24 months would boost my credid tremendously. But when I adjust it to paying it all off at once their is only a small gain. I'm confused!!

Any advice would be appreciated

---

Forget the simulator.

The sooner you pay it down the sooner you'll feel the positive effects of paying it down.

What the simulator is saying is that the passage of time helps your scores.

[Anonymous]

That's what I was thinking, but I wasn't sure,

Thanks for the advice!!

[jamesdwi]

this advice for the best credit score, not necessirly the lowest cost.  

1.  Pay down any card that is over 80% Utililized (creditors consider these cards Maxed out, large impact on your score), pay at least minimum payment on all other cards. 

2. Move on to any card that is at 60% Utilized (near maxed out and hurts your score as well) continue to pay at least minimum payment on all other cards. 

3. Then do the same on any cards above 30%, continue to pay at least minimum payment on all other cards.

4. Try to let the fewest possible cards report a balance, keeping in mind the first 3 rules.

at this point credit companies will be pretty happy, for the best credit score pay all cards except one to $0 before your statement cuts, and on the last card let a small amount report, more than $5 and less than 9% of its credit limit, the exact amount on this last card varies by the person.  

After your statement cuts you can pay off the card with the small balance, and pay no interest. 

Making only the minimum payment is bad, lenders frown on this, pay at least double each minimum payment if you can afford it. 

For best results and least cost to you, pay off the cards with the highest interest rate, and pay more than the minimum on all others. 

[RobertEG]

Scoring of % util has no historical memory, and is based on your current % util.

The most significant factor is WHEN you expect to actually need your score, such as when you expect to apply for new credit, and then maximize your util so as to tweak max points just prior to your application.

The only significant proviso is not to have any one card at a very high % util for any period of time, as that might trigger a possible reduction in credit limit.

Otherwise, % util scoring is normally recoverable.

Max util scoring generally is to have one account report at 1-9% util, with others having no balance.