I'm in the process of getting the house refinanced. When the refi goes through, I'll have some cash with which I'd like to pay some balances down and hopefully raise my scores. I have 6 credit cards and 2 installment loans - all unsecured. The largest loan is with Wells Fargo Finance, for about $8k at 16% interest (ouch - but it's unsecured at least!). So, which is better, pay off the installment loans or pay off the cards? If I pay the installment loans, I'm left with only credit cards reporting. And if I pay the installment loans, can I expect any score increase? Any advice is deeply appreciated...
The general feeling is that paying off an installment loan will not help your score. So, if improving your score is important, use the money to pay down the credit cards. How bad is the APR on your credit cards? If it is high, you may want to pay it down and then ask for a lower APR. Just tell them you paid the account off because the APR was too high. If some of your cards are offering good BT rates, consider paying off those cards, then use the BT to pay off other high rate cards. Consider the possibility of paying off the cards and then getting either a lower rate or a BT rate with which to pay off the installment loan. Bottom line is to get some ideas on how to maximize this for your benefit. My experience is that the rates will be lowered and the BT offers come when you pay down the balances.
To get the FICO score up you are much better off paying all credit cards down to zero. Failing that try to get your total revolving utilization below 15%. Revolving accounts are accounts where you do not have to pay off the entire balance.
Thanks to all! This is very helpful information - especially about installment loans not factoring in too heavily on the scores. It looks like I'll be able to pay off all the cards, which should definitely improve the scores!
