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bmies

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Payoff Question and Credit Utilization %
I just got through with an equity loan that enables me to payoff about 3/4 of my overall credit card debt. First paid off the 2 high interest cards, now using the remainder amongst the other 5 with similar interests. To have the best impact on my credit score, should I bring those 5 all to 25% of their limit or payoff 4 and leave the other 1 at 90 % of its limit? Something in between? I am concerned about the companies chasing my paydown with limit drops. The overall utilization % issue is the only negative factor in my credit history.

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Well, it looks like you've already taken action, but I would say it depends on what the interest rates are on those cards.

If all cards are the same rate, then yes, reduce them all. But to help you pay everything off quicker, it would probably make more sense to leave 90% on the lowest interest card and pay off the higher interest cards first.

For example, if you have 3 cards with $1000 limits and have $900 on each card for $2700 overall... If one card is 24%, another is 22%, and the last is 12%, and you have $1800 to pay off, it would be better to pay off the 24% and 22% cards and leave the 12% one at 90% utilization. In this scenario, you would only be paying 12% for that remaining $900 balance. Otherwise, if you reduce all of them to $300 (30% on each), then you are paying a total of 19.3% (the average rate of all three cards combined) interest on the remaining $900.

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I was fortunate enough to be able to make a significant overall payoff towards my cards, and less than a month later my credit score has jumped from poor to excellent.  I paid off completely my 2 highest rate cards, and I paid the remaining cards (all of similar interest rates +/- 1.5%) down to sub 30% utlilization.  My credit score jumped nearly 150 points in one month.  It is quite amazing the factor that credit utlilization has on credit score.  

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done

Helpful to 2 out of 2 people

Thanks johnnybinsea and pennstate04.  

I took your advice and was able to pay off 2 cards completely and pay the others down to under 30% of their respective limits.  I will continue paying down as agrressively as possible, and I certainly hope to see my credit score improve dramatically.  

Before we moved overseas 4 years ago, my credit was excellent.  Now, 2 children, a transatlantic move, and countless flights later, my credit is terrible.  Very happy to make a solid move towards fixing it!

Reply by
TexasSweetness

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Life has a way of affecting our credit stuff I so understand.  While going to school my utilization went to over 100 percent.  I am just now getting it down to about 91 on the one and 85 on the other.  The 91 is only 7.99 interest where the one at 85% is 12.99 interest than back up to 19.99 in dec

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yup, i agree pay them all down, don't leave one at 90%. don't worry about them decreasing your credit limit, they probably will not. especially after you pay them down! if anything they'll probably give you more. your scores should come up nice if you can get them all to 25%. 

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option A.... You dont want any cards that high of utiliaztion.  Having them that high might cause the credit card companies to do adverse action. 

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Not my card

So years ago my dad opened a shell gas credit account and had them put each child's name on individual cards (ex. A card for "John" would only have "John's " name on the card). My father pays the bill, but my siblings ran up the card to make it a high utilization card which is hurting my credit. Is there a way to dispute this and possibly get it removed from my report?

Reply by
scottywilson2

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Call shell and let them know you would like to close your name out of that credit. They should be able to remove you so it's not affecting you negatively. 

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It really depends on how fast you can pay off your total balances. If it's going to take you a while to pay them off then you should get them all to 25%. If you are going to pay off credit cards fast then it's not going to matter too much to pay them off one at a time with one sitting at 90% for a bit because once you finally pay that one off, you will see your credit score jumping very fast because of the drastic change in debt to available credit ratio. l

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