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Question By
jimboslice222

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75% utilization as of now, need help with plan
Due to unforeseen medical bills and some bad decisions, I have 3 credit cards with a total utilization rate of 80%. I will be able to bring it down to 60% within the next month when I get my tax return, and the other 60% I am confident I can pay off over the next year. I am currently trying to figure out how much the utilization effects my score and how long of an effect it will have after it is paid off. I am confident in my ability to pay it off over the next year or so, but want to make sure it isn't in my best interest to allocate as much money as possible to pay it off in order to avoid long lasting credit issues (i could allocate my emergency fund and maybe liquidate some other investments). I would like to avoid all of this due to my confidence in my ability to pay it back 100% over teh next year, but want to make sure this is the best move.

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OK, First off Utitlization is 30% of your score so it has a big affect.  Second 80% uitilization is viewed as 100%  So yes you want to get that down as fast as possible.  The problem with high utilization is that you might spook your credit card companies.  If that happens they might balance chase you.  Meaning that everytime you make a payment they lower your credit payment to whatever your new balance is.  For the most part they can handle it for a few months but if you let it sit above 40% for too long you will have there attention and not in a good way.  So yes I would bring it down as fast as you can to at least 40% and then go ahead and take your time.

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Reply by
johnnybinsea

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Sorry forgot to answer your other question.... The great thing about utilization is it has no memory, so as soon as you start bringing your balance down you will see your score go back up.

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And another thing. ...

The faster you get it paid down, the less interest those buggers will get out of you!

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