Paying off CC Debt

[msfdisk]

I have about $9400 in CC Debt.  I'm looking to increase my score rapidly.

I've paid off 4 cards the past year by using zero based budgeting.  I've recently come into a free $5k and plan on using it to pay off $5k in CC Debt.
My question is should I simply pay the lowest balance cards with the $5k then continue to pay extra on the remaining $4k and get those paid off in 8 months ?
OR
Do I pay down each card to a certain utilization?

I'm looking for the biggest impact to my credit score as far as utilization.  
I have an old DirectTV bill that recently went into collection and on my credit report (with-in the last 30-days).  I plan to attempt a pay for delete on that.

[centex]

What are the balances, limits AND, arguably most critically, the APR attached to each balance...

 

While not as pretty for score impact, getting rid of the highest interest accumulations will look better to your checking accounts...

[msfdisk]

Balances:

• 374.82 @22.9%
• 537.07 @16.2% (account closed by creditor)
• 863.62 @28.2%
• 987.95 @23.9%
• 996.27 @30%
• 973.81 @26.5%
• 1167.70 @16.5%
• 1893.19 @30%
• 1982.85 @24.2%
   

[cv91915]

17 hours ago, centex said:

What are the balances, limits AND, arguably most critically, the APR attached to each balance...

 

While not as pretty for score impact, getting rid of the highest interest accumulations will look better to your checking accounts...

 

10 hours ago, msfdisk said:

Balances:

• 374.82 @22.9%
• 537.07 @16.2% (account closed by creditor)
• 863.62 @28.2%
• 987.95 @23.9%
• 996.27 @30%
• 973.81 @26.5%
• 1167.70 @16.5%
• 1893.19 @30%
• 1982.85 @24.2%
   

 

Since your original question is about how to pay these off to most favorably impact your FICO scores, knowing the limits on these cards is necessary in order to give the best advice.

 

Utilization (balance reporting divided by limit reporting) is a major factor in your scores.  $1,982 on a card with a $2,000 limit is disastrous, while $1,982 on a $50,000 card wouldn't matter. 

 

Total utilization (all of your reported balances divided by all of your reported revolving limits) also matters, as does the number of cards with balances.

 

Do you have any cards with no balance that you haven't listed here?

 

The financially prudent move would be to make minimum payments on all but the highest-rate debt, and throw everything you can at the most expensive debt... once the highest APR is repaid, focus on the next highest, and don't stop until they're all repaid. 

 

From that point don't charge anything you cannot repay in full when the statement arrives.

[msfdisk]

What is the utilization sweet spot?

[msfdisk]

I have 4 cards that are paid off.
One with a $200 limit

one with a $500 limit

one with a $500 limit

and one with a $1000 limit

 

I was planning on paying all cards off except the ones with the highest balances.  My reasoning behind that was to use the snowball effect to pay those off within a few months.
My overall utilization will go down to 46%

 

Edited January 30, 2019 by msfdisk

[Kat58]

19 hours ago, msfdisk said:

Balances:

• 374.82 @22.9%
• 537.07 @16.2% (account closed by creditor)
• 863.62 @28.2%
• 987.95 @23.9%
• 996.27 @30%
• 973.81 @26.5%
• 1167.70 @16.5%
• 1893.19 @30%
• 1982.85 @24.2%
   

Pay off now

 

Get the remainder reporting under 50% (for scoring purposes)

 

 

[hegemony]

pay highest APR first and let fico be damned

[centex]

From the standpoint of score, the closed account will hurt as long as it has ANY balance. 

 

Beyond that, you have far too many accounts with balances, which is a score killer.  But the primary focus, after payment in full for the closed account, is to get rid of the highest APR balances as quickly as possible.  Those will kill your wallet. 

 

If you can get a zero percent BT offer, then move everything (or as much as possible) over to that card. 

 

Fix the spending problems and never carry balances on cards, especially those with insane APR's, unless you have some manner of promo offer. 

 

As noted, however, better guidance cannot be given where the poster does not want to provide the necessary pieces of the puzzle.  Balance in relation to limit is just one element of utilization scoring calculations.  You give one post with balances and another with SOME of the limits.  We have no idea what the limits are for the accounts you have provided balances and APR for, which makes it impossible to assist with score-specific guidance. 

[Konrad2012]

On 1/30/2019 at 5:42 PM, hegemony said:

pay highest APR first and let fico be damned

This.  Nothing else matters.

[Occam]

On 1/30/2019 at 8:32 AM, msfdisk said:

What is the utilization sweet spot?

$0<[sweet spot]<1%, on exactly one revolver ("exactly one" meaning $0 on all the others). 

 

https://creditboards.com/forums/index.php?/topic/544017-the-master-2-reporting-trick-explained/

 

$4 on anything but Chase should do it.

The fastest way to get there is to pay highest APR first, which is also best for your financial health.

[Konrad2012]

Make sure you call and get the current payoff amounts and then overpay that amount slightly to cover any trailing interest so they report with $0 balances.

 

After the payments post, call again and ask for a mid-cycle reporting update...some creditors will comply some won't.  This will stimulate any balance transfer offers that much quicker when you get AR'd. 

[legaleagle2012]

Since the interest rates are all pretty similar, I would pay off  the 6  small ones first. If these are delinquent or become delinquent, you could be sued. Paying off the 6 eliminates the possibility of 6 judgments and court costs / legal fees, all of which would be more than the card balances. Theoretically, those 6 could produce about 9K in costs for you.

[Occam]

5 hours ago, legaleagle2012 said:

Since the interest rates are all pretty similar,

30% compounded is not "pretty similar" to 16.5% compounded and the divergence is exponential.

 

I would pay off  the 6  small ones first.

This is horrible advice. Pay highest APR first.

 

If these are delinquent or become delinquent, you could be sued.

Why would anything become delinquent? If this is even a possibility, foolish financial decisions like not paying down highest APRs first make it more likely.

 

Paying off the 6 eliminates the possibility of 6 judgments and court costs / legal fees, all of which would be more than the card balances. Theoretically, those 6 could produce about 9K in costs for you.

Keeping them current eliminates the possibility of judgments and court costs / legal fees regardless of which order you pay them off so this is moot. Paying them off in the correct order (highest=>lowest APR) saves money and eliminates the debt faster.

OP, if you are fishing for 0% BT offers for the last $4k, you might make one exception and pay off the closed account first as Kat suggests.