A friend asked me a question and I don't know the answer.

He has the money to pay off some debt and wondered which would improve his credit score the most. Paying off the debt all at once and leave the credit lines open or paying off the debt over a short period of time (a year) and leave the credit lines open at the end of that time.

another question would be what are the interest rates and amounts involved?

if the balances are a small percent of the individual credit line, they might have minimal impact on the score now, so paying won't do much to change his score.

if the interest rates are high, pay them off now, any difference in the credit score effect over a year between the two choices will probably be minimal anyway

also any impact on his score would depend on his score now-paying off debt with an 800 score won't do much, but at 500 its a different story.

Pay it off all at once.

That is my thought, but I am someone who doesn't like debt so I'm probably not the best person for him to ask.

His credit score is 620 and his debt is mainly credit card with four cards nearly maxed out.

The optimal credit card debt for scoring purposes is only one card reporting a small balance. The sooner, the better.

The idea that slowpaying balances has any positive effect on credit is a somewhat prevalent myth, but is nonetheless fiction.

if he has the cash, pay them all off ASAP

I'll let him know.

or at least get the balances to under 30% of credit limit

Brag post, my wife just got a targetted offer in the mail for AMEX Blue Cash Everyday (the 3-2-1 non annual fee version), for $250 cashback after $1000 spending in 3 months. Never seen an offer so good before the the BCE. I have her as an AU on my BCP card.

Damn I am jelly. I got the preferred for 250/1k but have to pay annual fee. So effectively 175/1k.

i have bad credit and just got approved for my first ever CC, the capital one platinum card. doesn't look like this card has any cashback or real rewards to speak of, more of a credit builder. they haven't set a credit limit yet, but im wondering what is the optimal usage of this card to improve my credit score

have it report a nominal amount of money (~10$) every statement (by paying off as you spend or just lite use) and pay off in full(obv) every statement.

I thought this was going to be a grunch but it's really just more of a gripe. I signed up with Credit Karma and it's great having access to my score. I just wish I could easily model what the impact would be if I paid off certain debts. That feature is 'under construction'.

Capital one offers that service if you have one of their cards.

so, I ended up getting an amex bce. it's been fine. they sent me a letter in the mail explaining their purchase protection and warranty benefits, except... they sent me 19 copies of the same letter.

Wow! Lol. I guess they like you.

My gf got the same targeted offer. I've just recently gotten her into signup bonuses, so this was a great one for her. Instant approval and she won't have to do any MS to meet the minimum spend (which means I don't have to do the MS for her).

For anyone that receives this offer, you should consider it as it is a solid bonus for a relatively low minimum spending requirement.

My fiance got the same offer as well

great offer and in general amex is awesome so it's nice to have a fee free amex

This was me a year ago. Use the card, but pay the balance before the statement cuts and leave $10 on the statement to report to agencies. In 6 months you'll have a history with Capital One and you can get their Quicksilver which is 1.5% cash back on everything. The extra credit will boost your score for other cards.

so you're saying to carry a small balance and pay interest on that balance? doesn't that look bad that i didn't pay everything at the end of the month?

I don't really believe there is an "ideal" way to use the card.

In my opinion, if you're not using anywhere near the credit limit, just use the card normally, and pay it in full when the statement arrives.

Doing anything else might optimize slightly, but more likely it will have no effect and you're just adding potential operations to trip up later.

I think he is saying to pay all but $10 before the statement cuts (ie, before it is sent out, finalized, etc). Then you would pay that $10 after the statement cuts but prior to the due date of that statement.

Looks good for your credit score, and your bill is paid in full every month, so you avoid interest and fees.

Nah hes saying pay as you go but when the statement reports have it report a nominal amount. You have like a month after the billing statement ends to pay without accruing interest,

Has anyone ever tried leveraging a balance transfer for a higher starting credit limit? I just took the AMEX 250/1k deal that some of you mentioned. They approved me the same day online and gave me a 4.5k limit. That isn't bad, though I was hoping they might go a little higher since I have a 20k limit and a 6.5k limit with my other two cards.

Since my card with the 20k limit has about 4k on it right now, I'm thinking about calling Amex and asking for a bit of a bigger starting credit limit since I want to transfer the 4k over to them and that would take up most of my credit limit right away leaving me little room to work with. Anyone ever try this?

The transfer itself is pretty much neutral EV weighing the interest I'd pay before paying it off vs the 3% transfer fee, so it doesn't matter to me if I actually do the transfer or not. Seems like a longshot to work anyway.