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ngayle16

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I have money to pay off all my credit cards how should i go about paying & maximize score increase
I have really horrible score and my husband and I are trying to buy a house in a the next 2 years. we have money to pay off all of the cards we have. The problem is that we utilized over 98% of our credit and we have a late payments at different times. I was told I should show at least 6 months of no late payment to show good track record. So our plan is to do the following.

1. Pay 70-80% of our outstanding balance on all cards, to reduce credit usage %.
2. Setup 6 consecutive payments to pay re remaining balance on each card to show a 6 month track record.

Any help would be great.

Thanks

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I think your plan is pretty sound; however, just make sure your utilization rate is under 20% when you make your first large payment, so basically if you are at 98%, pay off at least 79% to get it under 20%. I say that only because it will have the greatest effect on your credit score.

The other option is to just pay it all off in full since you have the money to do so, and then each month just charge gas or groceries to it and pay off your statement balance each month, it will have the same effect of on-time payment history, but save you a lot of money in paying interest to your credit card company. After two consecutive months of payments in full you will not be charged any interest and as long as every statement has some balance (even just $50-100 for gas or groceries) you will have small utilization rate each month (in between the 1-20% you need for the best bump in your score). If you choose to stick with your plan, you should still utilize this advice once your cards are paid off to continue to build up your on-time payment history and utilization rate.

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