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Cholin

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How can I raise my credit score 75 points in six months or less?
Im new to credit karma. My ck score is 628. I have a debt utilization ratio of 89%. I owe ~12k in credit card debt, which includes a Bank of America card($5900/6000), a Discover Card($3400/$3600), Citibank card with a balance transfer of 1.8k, a Firestone card with $450 on it and a Best Buy Card with $230/$700 on it. I just received a letter from a collections agency regarding a $290 bill for medical test. I've had two late payments on my accounts in the three months. I have $800 in cash to pay some of this off. What should I pay first. My goal is to raise my credit score to around 700 because I'd like to buy an engagement ring by the end of the year and will have to finance it most likely. Also I receive about $1k cash in July. What should I do with that?

Thanks for your help!

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Since you have (almost) maxed out your accounts with BoA and Discover, paying not wisely or any other late payments can result in collections of these two accounts. Banks/Credit grantors can quickly smell the risk. They do a soft pull of your credit report every month so they know your current situation, even that you are paying them on time.

As in my previous answer, how you should allocate your cash depends on the APRs of your credit cards. But normally, I will afford the minimum payments of all accounts first, set a side for the next month as well if the income of next month cannot afford those. If you still have extra then pay down the balance of the card with highest APR so the interest total will be the least after this paying down. And when any of your accounts is about to be paid off, do pay it off so you don't have to worry about it any more and you can focus on other debts. The question is not how to raise your credit score, but how to efficiently manage your debts. If you can do the second, your credit report will be better and your credit score will follow to raise. The score can fluctuate, but it will raise eventually.

Reply by
Cholin

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Thanks for the your help and quick responses!

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Mission impossible!

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You have already had a collection of $290 medical bill and two late payments. You will be lucky if you can manage not to receive any other collection from Bank of America, Discover (where you maxed out) or other credit grantor. If I were you, I will not aim for the engagement ring but aiming for paying my debt. If your fiancee really loves you, she will understand and will even try to help you.

My title of "Mission impossible" is only for you to raise your credit score 75 points in six months. But it is still POSSIBLE for you to manage your debt. What you should pay first is something that involves math. You have to get the APR on all cards and apply the APR to your current situation for your total amount of interest you have to pay monthly, and try to apply to some scenarios where you pay down some balance. To minimize the damage to your credit report/score, you should not spend all of your cash for the balance. Instead, try to pay all accounts the minimum first then if you still have left cash, pay a bit more for the card that has high APR. Remember to think for the next month before you pay more than minimum for any account. It's better that you can pay on time 2 months (just minimum) than only being able to pay on time, a lot, in 1 month, but not being able to afford the minimum for the next month. When any of your accounts is about to be paid off, do pay it off so you don't have to worry about it any more and you can focus on other debts. Hope this helps. And good luck.

Reply by
Cholin

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Thanks for the info but I'm confused. Why would Bank of America or Discover go into collections? I haven't paid them late and my accounts are in good standing. I make enough money to pay all of my minimums easily. My question directly is If I want to raise my credit score as much as possible as quickly as possible where should I allocate the extra $800 cash I have? And where should i put the extra $1000 I'll be receiving in July?

Thanks again for the help!

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