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How should I best pay off these credit cards to maximize....


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How should I pay off these credit cards to best maximize my FICO?

Both accounts are closed. I know that it is best to pay off the account with the highest rate first, but these rates are extremely similar.

1. Discover Card (closed account)

balance = $1618

interest rate = 15.99%

I have not paid late on this account for the past year.

2. Visa Card (closed account)

balance = $2013

interest rate = 15.74%

I have a late payment on this account 7 months ago.

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See I thought that by closing the accounts while there was still a balance you were actually hurting your score -- as well as possibly getting hit with added "FEES" from the c.c. company. Hopefully someone will know more info.

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Even though the rates are close, I'd still pay the higher %age card off first.

If the accounts were open, they would improve the score a little bit, but there's nothing that can be done about that. Paying off the balances will help your score significantly because your credit usage % goes down.

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I recommend you get a personal loan from your credit union ... rates are currently around 7.99-percent ... your monthly payment for a 12-month loan would only be $39.28. And you can always pay it off faster penalty-free!

You credit score may drop a point for the inquiry, but that would be made up by the points gain you would get from the paid-off credit cards.

Just think, if you were to pay off the debt in 12 months:

1) The Discover Card $1618 @ 15.99, will really cost you $1762; difference of $144.

2) The Visa Card $2013 @ 15.74, will really cost you $2189; difference of $176.

3) The Credit Union Loan $3631 @ 7.99, will really cost you $3790; difference of $159.

So by getting the debt consolidation loan, your credit score will increase and you will save $161!! It's also very possible you may save more by paying it off sooner.

You will also benefit later by the positive tradeline in your credit report from the installment loan and will gain a positive relationship with the credit union, so they will be inclined to lend you additional money, credit card, auto loans, home loans in the future.

You can also think of it this way, the $161 savings will also provide you with four months of loan payments, reducing your total debt time to from a year to only 8 months!

If you are not a member of a CU, learn more at: http://www.creditunion.coop/

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