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Posted in Credit Cards
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Question By
rizwan88

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0 People Helped
Is it better to have one card with zero utilization rate or many (2-3) with less ut rate ?
whats better ? paying off one card entirely, or paying 2-3 cards so that the utilization rate on all the cards go down ?

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1 Contribution
33 People Helped

Do what motivates you most

Helpful to 33 out of 38 people

I would start by making sure your utilization rate is under 30% on each card (major boost for your credit score).  

Once you've managed that (if you needed to), I would pay off the lowest balance first.  It gives you such a sense of accomplishment and really keeps you motivated when trying to tackle some debt.

Reply by
Frostacious

4 Contributions
30 People Helped
Helpful to 8 out of 8 people

Always attack the largest debt with the highest utilization rate.  If you go with the lowest you'll allow for the biggest debt to make major blows to your account.  Biggest Debts First.

3 Contributions
37 People Helped
Most Helpful Response

Having all accounts

Helpful to 15 out of 16 people

Balance your money between all of the open accounts you have, for instance, if you have 3 credit cards, one utilization/limit of 300/500, 1000/1500, and 2000/2500, it is best to have them all <%50 utilization. So work  for this 249/500, 749/1500, 1249/2500, instead of having 300/500, 1000/1500 and 0/2500. This is a rule of thumb when wanting to increase your credit score. Now, if you are trying to pay them off, then go ahead and pay the ones with the highest APR first.

Hope that helped,

Daniel 

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Reply by
Anonome

26 Contributions
169 People Helped

 I agree. After you reach the less than 50% mark, then strive for 30% and then even lower to 10%. Each mark seems to help score more than the one before it. 

4 Contributions
15 People Helped

Utilization or Payoff - that depends?!

Helpful to 13 out of 15 people

Depends.......if you plan on applying for some sort of loan/credit, then reduce your ulitization below 30% on all cards. If a new loan/credit is not in your immediate plans then paydown/payoff the card(s) with the larger balances &/or interest rate. With the help of credit karma and credit in need of a major overall, I've become a tactical pro on cleaning up/using and managing my credit within the last 2 painful years.

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Reply by
Anonome

26 Contributions
169 People Helped

 I also agree with this. Getting to less than 50% as stated in a previous post helps a lot. So did getting to 30% but I am going for a home loan hopefully next summer and it was my goal to get them all in great standing. Otherwise if you are just aiming at saving money in the long run, then paying off the highest ballances and highest interest rate cards is the way to go. I truly hate this game but after learning some ins and outs, you can really do a lot in a year or two. Im now managing my partners accounts to do the same with his scores/credit. 

1 Contribution
13 People Helped

Highest apr first

Helpful to 13 out of 15 people

Definitely pay off the higher Apr cards first these cards eat away your money month by month, but keep paying the min payment amount on the other cards, but if all balances on all cards are the same Apr then I would also pay off one card at a time.

1 Contribution
7 People Helped

rizwan88

Helpful to 7 out of 9 people

It would depend on whether or not it would make your payment ,on all cards combined, lower or not . If it doesnt lower them then I myself would pay on all of them to lower your "ut" rate. I hope this helps good luck 

1 Contribution
6 People Helped

everyone join a credit union

Helpful to 6 out of 8 people

these places r awesome i bought a 2013 chevy sonic last aug and it dropped me credit 40 points then i traded that in on a chevy silverado 2013 2 months ago and drop it even more now i went from 700 to 623 so im out of being able to have good enough credit to do anything with to the point the second bank i had for the truck is a credit union it was hard to get into but i some how managed after my first payment the called me and said they wanted to by some of my credit cards off and give me a $10000 credit limit card and put all my 29 % rate cards on it and they fixed me up with a 2 % rate on there card so ill be able to have that dedt paied off in 3 years so its about 2 weeks after i did the credit transfer and i got a credit karma alert so i checked it what a great website and my score went up 56 points in 2 weeks and i have left the cards that they paid off open so the my debt ratio is way down compared to my open credit 

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Reply by
julietjulian

20 Contributions
156 People Helped
Helpful to 1 out of 2 people

Huh?

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Reply by
EddyTX

1884 Contributions
3681 People Helped

Good job.  That's the way to tackle it. 

And I agree. CU is the way to go. 

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Reply by
EddyTX

1884 Contributions
3681 People Helped
Helpful to 0 out of 1 people

The reason you score is dropping is because you aren't keeping a loan open long enough. 

You have to keep a loan at least 2 years for the lenders see it as an asset. They don't want to lend you money now because you cost them more to give you a loan than they made off you. 

The big guys see you as to costly to do business with. 

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Reply by
Anonome

26 Contributions
169 People Helped

 Thats great news. Ive been considering a CU account but I guess this confirms it. It has helped me tremendously (once my credit was good enoughf for no fee cards) to transfer ballances to a new higher limit card. I now have 15 months at 0% interest to pay  off those transfers. Saving me a lot vs paying on a couple of 20-24% cards. 

1 Contribution
5 People Helped

Tackle high APR CC first

Helpful to 5 out of 7 people

First pay off the CC with the highes APR. If you have a

CC with a debit of 500 and APR of 20%

CC with a debit of 10k and a APR of 10%

Tackle the CC with a debit of 500 and APR of 20% first and pay the minimum on the others. 

1 Contribution
5 People Helped

Helpful to 5 out of 7 people

It seems like either way would do the trick. The utilization rate that's shown on Credit Karma seems to be all of the credit used on all cards combined, divided by the full amount of credit lines extended. Either way would achieve the same result if that's actually the case.

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Reply by
Anonome

26 Contributions
169 People Helped

Yes but you could also save a bundle on higher interest cards if you were to pay it off first (or if possible, get a new card and a ballance tranfer to it. Most have 12-15 months at 0% interest, giving you time to pay them off)  Depends on your goals. After my learnig curve here I will NEVER go over 50% UT even in an emergency. 10%-30% is much more managable and helps scores a lot. 

1 Contribution
6 People Helped

That's Easy

Helpful to 6 out of 10 people

It's always better to payoff one card at a time, the one with the highest interest rate first.

Reply by
wuk620

1 Contribution
9 People Helped
Helpful to 9 out of 16 people

Wrong. Pay off the one with the lowest balance. The take what that payment was and tackle the next one.

1 Contribution
2 People Helped

WHAT I DO IS.....

Helpful to 2 out of 4 people

Don't know if it is better but I will tell you what I do. I payment on all my cards but on the major cc, I put more money on them than the dept. store cards. The interest is higher on my major cc than my dept. store cards.

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