Well I guess I'm one of the lucky ones getting a decent tax refund this year. My question is what to pay first to reap the best increase in fico. I presently have 3 cc accounts with balances hovering slightly below the limits. All 3 are $1000 or less in balance and limits. I also have 1 installment loan with a $14,000 balance on a $25,000 loan. MY scores are all running in the mid 600's. Any one have any first hand knowledge on what would be my best attack plan to increase my scores? Thanks for any response!
No one is truly "lucky" when they receive a tax refund, in my opinion. If the government has your money all year long they get to collect interest on it. If you have the money, you're more fluid and you can put your own money to work. I would much rather have to pay money in at the end of the year than receive money back from the government. Buckets
jp1010, To answer your credit question (which is why you're here, instead of just getting idle chit chat on tax returns) I would first pay off your CC balances. Revolving credit utilization is a major factor when it comes to FICO. I can say, that is how I spent my much needed tax refund....Paying off all (3) CCs.
I agree. I've read, learned, and verified that keeping your CC balance low (at least less than 50% your credit limit) is a good way to maintain a high FICO score. So, pay off those CC's. =)
Do scores usually jump after you pay to 50% (after the new balance is reported to the cra's)? How many points can be expected.
Correct me if I'm wrong, but I don't think paying down that kind of $$$ is going to affect your scores much at all. I would think it would be smarter in the grand scheme of things if you instead concentrated on paying down the cards or loan(s) that have the highest interest rates to avoid finance charges. If those are associated with the credit cards (and I suspect they are, given your stated low balances), I would think you would do the most to decrease the amount of $$$ leaving your pocket each month and reduce your total utilization. Buckets
Why would anyone flame you for saying that a person should pay off the cards with the highest interest rates? It's the obvious choice. What was their reasoning? Buckets
The question was what would increase the score, not what would be the best to pay. Since you asked, I'll correct you. If this person has 3 $1000 limit cards that are near maxed, paying each card down to $500 or less, will give a marked increase in score.
Just to let you know- I re-financed by car. They sene me the $$. I mailed the payment to previous finance co. they marked the account paid- I1. My score only went up 2 points. CC debt is more of a score factor than installment auto loans.
...is it better to pay 3 cards down by half or pay 1 card off and another at 50% and pay the last card as usual???? Especially since one might have a really high APR. Which is better for FICO? Would it matter? Afterall, you're still paying the same % of your debt down.
Thanks for the responses. I am honored to hear from George and LKH. I have'nt been on as much as I would like recently, just to search and read, but it seems like a whole lot of new names and all the old familiar ones are gone! Either way, thanks for the info everyone.
Re: Re: what to pay first for fico increase Fico doesn't like to see more than 50% usage on any card. So, as I said, for score increases, paying the 3 to under 50% will bring the most increase. If not interested in score increases, then I am with George. But, the question was re:score increases.
Re: Re: what to pay first for fico increase LKH, Quick question. Does paying down $500 on each of 3 different cards result in a larger score increase than if one just pays $1500 on one of the cards, even though the actual ratios stay the same? ???
Re: Re: what to pay first for fico Im not LKH, but... YES. because it looks at each account seperately. a $7500 account with a $3500 balance is better FICO-wise the three $1000 cards with over 50% utilization. please do correct me if im wrong.... However, i have enough literature to back up this statement enough to assert my response
Re: Re: Re: what to pay first for fico increase So, LKH is saying that: 3 $1,000 CC each with a $500 balance is better, FICO-wise, than 1, $1,000 CC with a $0 balance; 1, $1,000 CC with a $500 balance; and 1, $1,000 CC with a $1,000 balance Either way the overall util is 50%, however. But, the second version has one maxed-out. Is this pretty much the consensus to raise FICO?
