Which is better?

[Anonymous]

I am about to have a sum of money.  In order to raise my FICO scores, do you think it's better to:

• Apply the sum to my CC's, bringing me from a 50% utilization down to 30% utilization?

    or

• Pay off a medical bill that's been sent to Collections?  (CA reporting as unpaid on CR since 8/2008.) 

I'm trying to apply for a car loan in the very near future.  Any thoughts as to which option would improve my FICO the most?

[Anonymous]

Since you're already in collections, paying won't help your score at this time, but there is a way to get PAID medical CA's off of your reports later.

Not knowing whether your 50% utl is 1000.00 or 10,000.00, the best I can offer is:

Get your CC utl's as low as you can.  Under 10% if you can.  (I think you'd get a better hike depending on what else is looming out there.)

Good Luck,

D-R

[Anonymous]

Thank you so much for the advice. 

My current utilization is approximately 50% or $8,500 of a $17,000 total credit limit. (5 cards) 

I'm already involved in the slow HIPAA process of getting 2 PAID medical collections off my report (hopefully!).  

My third collection is an unpaid medical collection for $2500. 

So my dilemma is, do I use every sent towards paying down my CC utilization (to under 10% eventually)?  Or do I try to use this money towards PIF of my unpaid medical collection so I can begin the HIPAA process for this one?   I'm not sure which course of action would be more profitable to raising my FICO scores.

[creditwherecreditisdue]

Will you be able to PIF the unpaid medical collection and is it definitely your last collection? Is it your last baddie?

[Anonymous]

I will be able to PIF (unless I apply the money to my CC  debt).  I currently have 3 collections reporting.  I am working on getting the two paid collections removed, but it hasn't happened yet.  If and when the other 2 are deleted, then yes, this would be my last collection/baddie on my CR.

[creditwherecreditisdue]

I would pay the remain collection and make sure they are all removed before applying for an auto loan. That way you will present a clean CBR with improved FICO scores and be able to save some money.