Best Way To Pay Credit Cards to Increase Credit Score
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My wife and me plan to apply for a home loan six month from now.
My wife’s score is pretty good – around 700.
My score is less good – around 630.I have three credit cards on my name with the following balances and limits:
C.C.1 – ~600/2000
C.C.2 – ~600/1000
C.C.3 – ~4500/7000I’d like to improve my score because I know that it means a lot of money in better interest rate over the life of the loan.
My question is whether its better to get C.C.1 and C.C.2 at below 30% utilization and leave C.C.3 around 65% or to get all three under 50%.
I can’t afford to pay off all the three at this time but would like to do whichever option is more beneficial for my credit score.
P.S: My payment history is flawless on all CCs. Thanks for your help!
It don’t make a difference..
From what I know it don’t make a difference what you pay.
What matters is your TOTAL credit utilization. i.e. the sum of your credit balance in relation to the sum of your available credit (i.e. your credit limit). It doesn’t matter if a specific card is close to the limit than the other. Only their sum.
According to what I know you need to be below 35% utilization ration if you don’t want your score to start going down. This is especially true for revolving credit – which is what credit card debt is, because it’s considered the riskiest.
Your credit utilization IS high, and you should lower it.
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