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paying off debt= higher score yes/no ?

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ChistineNJ
Frequent Contributor

paying off debt= higher score yes/no ?

i have 5 balances spread over 5 cards

300.00

2500.00

1500.00

800.00

1300.00

i want to pay all of these off within the month, currenly my utilization is about 40%  my question is should i pay all this debt off in 1 month? or should i pay off a few this month and a few next month? which method will yeild me a higher score? after i pay off this revolving debt i still have installment debt reporting ie student loans and auto loans that will report monthly.

C1 Venture 15K| NFCU NAV CHECK 15K| CASH REWARDS 5K| CARE CREDIT 3K| NORDSTROMS 1K| LORD & TAYLOR 1100| WALMART 600| TargetRed 500|Rebuilders

CAP1 1650| CAP 1 1100| BARCLAYS 2500| NREWARDS 8500|
SCT: VS 1100| EXPRESS 1100| JCREW 250| *HIDDEN TL BML 650

SCORES 709, 657, 623
Pre BK scores: 569, 587, 553
Message 1 of 3
2 REPLIES 2
Anonymous
Not applicable

Re: paying off debt= higher score yes/no ?

Utilization has no memorymemory. The effect on your score is based only on current utilization and not past.

Therefore the only difference between paying all today and paying over two months is an extra month of credit card interest charges.

Pay it now.
Message 2 of 3
Anonymous
Not applicable

Re: paying off debt= higher score yes/no ?

You should have two concerns with your credit cards.  (1) Not paying any more interest  (2) Improving your credit scores.

 

If you start paying the balance listed at the end of every statement (pay in full or PIF), then you won't be paying any more interest.  And in a couple months, that will cause all CCs except the ones your using to have a true balance of $0. 

 

The goal should be to get all your CC's to have a balance of $0 and then keep the balance of the remaining one to be always greater than $2 and less than 9% of that card's credit limit.  That's the received wisdom in terms of getting the most FICO juice from your CC's.  And even that is not something you need to do except in the 2-3 months before making a major purchase (mortgage pre-approval, closing on a house, buying a car, etc.).  If you PIF every month and make sure you are always spending a good deal less than you make, you should be fine.

 

Your auto and student loan will be great additions to your credit mix, btw.

Message 3 of 3
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