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Question By
tbailey3908

8 Contributions
16 People Helped
Need Help Prioritizing Paying off Credit Cards & Improving Credit Score
My wife (who has excellent credit) and I (who has very poor credit) got married just over a year ago. As of September of 2012 we had managed to rack up over $40k in debt on our cards (mostly due to the wedding, and getting furniture and whatnot for our apartment). We have been working very hard to get completely out of debt and should have all of our cards paid off by March 2014 (only a few more months to go) of this coming year.

It has definitely been tough to this; it required a lot of ramen noodles and PB&J sandwiches, but it is definitely paying off. Once the cards are paid off we will be completely debt free, and will start saving to purchase a home . (Well technically, I still have about $18,000 in student loans remaining; however, my recently acquired new job agreed to pay off under the condition that I signed a 3 year so contract with them.. so I'm not counting it).

As I mentioned before I have horrible credit. Right now it is right at 500, but less than a year ago it was in the low 400s (my wife added me as an authorized user on her cards to help boost my credit). I currently have an $1,800 debt in collections (I was horrible at keeping up with my bills, and this used to be a whole lot more) and 2 cards with a max limit of $750; both of whic are still close to the max due to making minimum payments. We have been paying the card with the biggest debt/interest first).

So here is the issue, my new job also came with a $2,750 sign-on bonus (not huge, but better than nothing considering that they are also paying off my student loans) that I will be receiving soon. I would like to use some of this money to completely pay of the debt in collections (as I have read that having anything in collections seriously hurts your credit score), but I am not sure where I should put the remaining $950.

Since we are in a potion where all of our cards will be paid off by March 2014 regardless of this bonus, I want to focus on whichever method would create the biggest boost to my credit score.

Would it be better, to:

1). Split this amount evenly between the two $750 cards
2). Pay off one of the $750s and put the remaining on the other
3). Put this toward the card with the highest balance/interest

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