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Best Way to Pay off CC Debt


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I would like some advice on the best method in paying off credit card debt in relation to raising credit score. Should I pay the balances down to 30% then off over the next several months, etc.....

Any advice would be great from experience or knowledge of system. Thank YOu.

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So what type of credit card debt are we talking? Like tons of store cards, several majors? How much and how many?

Yes, paying what you have down to less than 30% of the balance will help. It's very good to keep your utility low on the cards you plan to keep.

Essentialy, you don't want numerous credit cards. I would consider keeping the cards (1 or 2 perhaps) that you have had the longest. The longevity plays a role in your score as well.

Somewhere around these boards there was a percentage of each element that makes up your credit score... not sure where that was.

So ideally, if you are like me, I have 3 credit cards. I have a lovely visa granted to me by my credit union with a 5,000 credit limit, I keep the balance low for obvious reasons. But the interest is around 11%, so I will be able to do better than that soon.

I had a first premier crap card I opened in 8/02, so I have over 2 years of NO LATE PAYMENTS, this is great. BUT I closed it this month because the interest was too high and I just used the card to get my credit rolling... and it worked, I got the card below and a great interest rate on my brand new honda (okay, it's a year old now but still...)

But all of a sudden I am getting offers for 0% intro apr and decent interest rates. I am considering taking Chase up on their platinum visa offer they sent my way

then there is my Jcrew card, I can't live without it.

Hope this helps. My scores are almost 700, high 600's. I have 2 medical collections left on my report

1 on Experian for 138 upaid

1 Equifax for 1800 unpaid(and I didn't even need a deposit for a nextel based on this report)

1 paid nco/consumers on TU

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Thanks for the reply. Here is the scenerio. All these accounts are in excellent standing. My last derog. was three years ago with a 60 day on MC.

Card c/l bal.

MC 10700. 9300.

VISA 2500 2400

VISA 2250 2100

Home Dep. 2000 353

Lowes 1500 447

Discover 9800 6300

Ok I know I should pay down the MC, VISA, Disc. right away. But, would it be more beneficial to spread the pay off over several months or should I pay it off tomorrow in full? I have been working on credit repair. I have one stupid CA paid in full for a whopping $68. I have disputed it and it comes back verified. I just had 13 inquires removed from my EQ and it raised my score 19 points. I also have installment loans for a truck, car, and RV and a mortgage all with perfect payment history.

I wonder why my scores are lower than some people who have filed bk or have tons of collections? Anyway, what should be my next move?

Should I close Home Depot and Lowes as I just opened them in March of this year? Discover I have had for 10 years all the other accounts are newer than 3 years.

Thank You.

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I remember a segment on the proper way to pay down debt on the Suze Orman show, and I believe I've seen threads dedicated to it here on this board. I will do some searching and see if I can find them. From what I remember, you want to attack the balance with the highest interest rate first. You pay the most you can on that balance each month, and pay the minimum on the rest. Then, when that balance is either paid off or paid down to where you want it, you start on the next card with the second-highest interest rate. On the other hand, if you have a big chunk of cash on hand and what to pay them all down in one fell swoop, I don't think it will hurt your FICO. Will probably help it.

The reason your scores are lower than some who have recently had a Chapter 7 discharge is that lenders know you can't file Chapter 7 again for six (?) years. I think that reasoning is more than slightly skewed, but that's the reason. Your utilization is way too high and that's what is tanking your scores. Just get that utilization down, don't apply for any new credit for a while, and you'll be fine.

I'd keep the Lowe's and Home Depot cards open for now. Sometimes closing accounts can ding your FICO. Also, resist the temptation to open any new lines of credit. Opt-out with the CRAs.

Are you planning on applying for a refinance, new auto loan, etc. in the near future? If not, I wouldn't obsess about your FICO too much right now. Just get those balances down, check your credit reports to make certain that there aren't any errors on them, and the rest will take care of itself.

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First of all get rid of the Home Depot card, you seriously don't need two home improvement card... Lowes is better... or else whichever one you had longer.

If you don't have really any derogs or bad credit in general, then I don't know why it would matter.

I would just be concerned about paying these people money to use their plastic. If you have the money to pay these cards, then definitely get rid of them and don't use them. Keep one or two if you simply can't resist charging things, but the use of credit itself isn't free, so think about that one for sure.

I think the best way to pay them down is the whatever is the cheapest way to do so.

Second of all, another reason to pay them off is because if you are saving for a home or something, you want your debt to income ratio to be where it should be and if you have documented debt then your ratio will be lower indicating that you might not be able to financially take on more debt.

This stuff you probably already know, but I couldn't resist.

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Thanks for all your advice. I paid off $22K in debt last night and feel so good today. I got a loan from a family member so it won't show up on my report. I will keep everyone posted on where my scores go when they recieve word of the pay offs. All I have left are 2 car payments and an RV payment, oh and the mortgage. My next question.....should I close any of the newer accounts or leave them open. Most of them have pretty good limits. Thanks

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