high CC balances, large payment, and utilization

Credit and mortgage advice Forums Consumer Credit Improve credit high CC balances, large payment, and utilization

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    • #246071
      davefollmer
      Participant

      Got myself in a mess and need to fix it.**
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      Two years ago, my credit rating was high but it is now middle of the road because of CC debt.* I have high balances and high limits:*
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      • card 1 has a balance of $9,000 with a limit of $25,000 (36% utilization)
      • card 2 has a balance of $8,000 with a limit of $11,000 (73% utilization)

      Between a tax refund and selling something, I have $6,000 to put to CC debt.* How do I allocate the money?* I am MOST concerned about my credit rating rather than the less than $100 interest difference.* So how important is utilization if both CCs are high?
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      Option 1:* Pay all to card 1 because I am so high on utilization that it doesn’t matter and I should pick based on interest rate, which is card 1.* If so, utilization would drop to 8%.* So I am left with one really high utilization and one relatively low utilization.
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      Option 2:***Pay all to card 2 to get down the highest utilization.* If so, utilization on card 2 goes down to 18% but I still have card 1 at 36%.
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      Option 3:* Split the payment to get both below 1/3.* If so, I pay $1500 to card 1 reducing utilization to 30% and card 2 gets $4500 reducing utilization to 32%.*
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      I think option 2 is the best but is there a magic threshold in the 30-35% utilization range that I should aim for with Option 3?
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      Thank you so much.
      *
      PS -This is a cross post from the credit card forum because posters in both seem to be very helpful but with slightly unique perspectives.



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