I have a variety of debts, and I have a strategy to pay them off. It starts with getting my credit score up another 40-80 points or so to reach the threshold where I can do a cash-out refi on the house (Texas, USA), use that to settle up a lot of credit debt, and then focus on items further down the list.
Anyway, when I have extra money to pay against the debt, I want to put it where it will most quickly increase the score, because every day until we refinance, the interest grows.
In particular, I am wondering about the following four categories:
- Active consumer credit cards
- Debt accounts from consumer credit cards that were canceled
- Personal line of credit from my bank
- Payment accounts on the verge of being in arrears, where I've been making each payment after the next payment has posted, so everything's always late, but I'm not technically in default.
Credit utilization is the main problem on my report, with overall revolving credit over 50% utilized, and individual cards over 70%, and in one case, over 90%. The line of credit is also in the 90's, but I think doesn't have as much credit-score-impact as the cards.
With money coming in soon, I want to strategize. My guess is that I can get the most bounce by targeting revolving accounts (cards, not L.O.C.) with the highest individual utilization. It seems, from how I've seen my score react over time, that the line of credit and the dead card accounts don't do as much, score-wise. Is that true? It also seems that continuing to run just into the edge of trouble on utility accounts and such isn't really a problem in the numbers (although its psychological value is hard to compare with money).
Are these guesses correct? Are there some general principles that I'm just missing here? I just want to be able to think about this in the right way.
Edit, comments to tell me that my overall plan is a bad idea, when you don't know the particulars and want to just advise without finding them out...... are utterly unhelpful. Please refrain.