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My debt is low, only about 3k, but it is spread out over 9 cards. Is it better to pay off the low balances first then work on the highes balance or the other way around?

2006-07-02 13:26:23 · 12 answers · asked by lilraceangel3 1 in Business & Finance Credit

12 answers

Don't pay them off. Continue to pay as usual. Keep the balances below 50% and pay them on time and this will help your credit score more than paying them off. Honest. Do not close any accounts either. Lenders want a snapshot of what your payments look like. It looks like you do not have much debt so do not be too concerned about paying them off. Keep that money for a downpayment or to cover some closing costs. Also be thinking----do I own a lawnmower? Garden hose? Will I have money to buy furniture to fill my new house? You will also need to show 2 months of reserves in a bank account for your loan. You would be better to keep that money in the bank for that purpose. Again keep balances under 50%, save some $$ for downpayment or new items you don't own when you buy the house-shovels, humidifier, dehumidifier, paint, the list is endless. Good luck and if you want more ideas/options let me know.

2006-07-03 05:52:05 · answer #1 · answered by unclejesse1 3 · 0 0

Since cleaning up your score is your top priority (not reducing your interest payments), you need to first pay down cards that are near their limit, regardless of the rate - having cards near the limit negatively affects your score. Since you only have six months, don't worry about paying them down to zero - just get them away from the limit.

After you've taken care of those, use whatever money is left over to eliminate the small balances. DO NOT close the accounts - any damage that was done by having them was done when they were opened, so it will NOT benefit you to close them right now, especially if you had any of them for a long time.

If you do the above, you'll have no cards that are maxed out (++++), and you'll have a high amount of available credit (+++). Just make sure you do all this as quickly as possible - the credit bureaus are sometimes a couple of months behind in updating your records.

2006-07-02 13:35:15 · answer #2 · answered by Speedy 3 · 0 0

Pay off the highest APRs first. Having paid off a low balance has only marginal improvement on the credit score. Paying off a high APR debt faster than expected is what banks like.

2006-07-02 13:33:51 · answer #3 · answered by Anonymous · 0 0

Paying as much extra as you can on all the cards is they way to go. I just bought a house, and 3k is nothing to worry about. However the interest is, so do with out eating out or anything you do that you can do with out, and pay as much as you can. Good luck. I personally got a second job to pay off my debt.

2006-07-02 13:31:41 · answer #4 · answered by Charlotte 2 · 0 0

Pay off the cards that have the highest percentage of use. If you have a card that has a $1000 cradit limit and you have used $600 and a card that has a $200 limit and you have used $180 than you want to pay that one down and possibly off than work on the larger ones. The best thing to do it pay a few things completely off though.

2006-07-02 13:44:49 · answer #5 · answered by dkwr14 3 · 0 0

No do the high ones first because they will only get higher the longer you wait. Maybe you can consolidate all your debt and pay it off that way. But otherwise, definitely pay the high points first.

2006-07-02 13:30:04 · answer #6 · answered by Anonymous · 0 0

I think you should look at each card and see which ones have the highest percent ineterest rate, and take in cosideration the balance of each card.

Pay off the smallest balances. Get rid of some of your cards.

2006-07-02 13:28:54 · answer #7 · answered by Anonymous · 0 0

I paid off my low balance cards first. Or, you can pay off the cards that have the higher interests rates first. Either way, once they are gone, it's such a relief.

2006-07-02 13:31:13 · answer #8 · answered by roberts1102 3 · 0 0

Forget about the balances girl!

You need to focus on the INTEREST RATES you are paying and start with the higher one and pay it off and then move to the second highest and so on...

Top 4 Answerer in Business & Finance. (Vote for me)

2006-07-02 13:55:32 · answer #9 · answered by Anonymous · 0 0

pay the highs first then the lows, and get rid of them because mortgage look verry close at debt to income.
the more debt you have the harder it will be to get a loan.

2006-07-02 14:38:07 · answer #10 · answered by cafe_blue_note 3 · 0 0

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