What Credit Card Should I Payoff First?
What Credit Card to Payoff First?
I had a question come in about what credit card a consumer should pay off first to get a good score.
Now I’m not talking about what to pay from a financial perspective. What credit card consumers should pay, obviously from a financial perspective they would want to pay down the highest interest rate card first and then try to pay off the lower industry cards.
What I’m talking about is how to get the best credit score quickly dollar for dollar. When consumers have three credit cards that are maxed out, step number one as always is to pay down any credit cards that are above the high credit limit. That is step number one. Any accounts that are above the high credit should be addressed first. When a credit card balances are over the high credit, the negative impact equal to an open collection account.
Step two should be to bring down the balances to forty-nine percent so if a consumer has three credit cards with different high credit amounts and they were all maxed out. I would tell them to pull down the lowest balance credit card to forty-nine percent first. Let’s say one was five thousand and another was two thousand, it only cost you 1001 dollar to bring the two thousand dollar max credit card to forty-nine percent whereas with a five-thousand-dollar credit card would take 2501 and to get them to forty-nine percent. Pull down the lower high balance credit card first and then work on the Higher credit limit accounts and try to get them all to 49%.
As I’ve said before then get the balances to 39 and then 29 and then 19 and then nine once the balance is 5-9% borrowers can expect to be at the highest credit score possible for each individual credit card.
I’ve seen “industry experts” give advice about the utilization ratio based on the total revolving balance. Including all of the high credit which is the revolving balances all of that balance added together. That’s just not the case credit cards are evaluated individually. Score values are based on each individual credit card not a total of all of the outstanding high credit amounts. It’s each individual credit card.
Stay tuned, we’ll have more videos coming and my new book out shortly so watch for them at www.TheCreditGuy.TV and it still free to get the six steps to a better credit score it at www.getloanready.com.
If you’re looking for other ways to improve your credit score to Getloanready.com There’s still six steps to better credit score and my new book posted there shortly. I look forward to having that out soon.
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