 TITLE: Which Debts Should I Pay Off First to Improve My Credit? CONTENT: Start By Paying Off Credit Card Debt\n------------------------------------\nYour current balances on various types of debt accounts impact your credit differently. To start, it's important to understand how credit scoring models distinguish between the two broad types of credit: Installment accounts and revolving credit accounts.\n*   Installment accounts typically have a fixed loan amount and repayment schedule. Mortgage, student, auto and personal loans are common examples.\n*   Revolving accounts, such as a credit card or personal line of credit, have a credit limit that you can repeatedly borrow against.\nThe balances on either type of account play a role in your credit, but your revolving credit accounts factor more heavily into your credit scores. That's because they impact your credit utilization ratio, which is a major scoring factor in both the FICO® and VantageScore® scoring models. The remaining balances on your installment loans also impact your credit, but paying down those balances may not move your scores as much.\nTo calculate your credit utilization ratio, you'll compare your revolving account balances and limits. For example, if you have two credit cards with $5,000 credit limits ($10,000 total) and a combined balance of $2,500, your credit utilization ratio is 25%.\nYour overall credit utilization and your credit utilization on individual revolving accounts both can impact your credit scores. In either case, a lower credit utilization rate is better. As you pay down your accounts, keep in mind that the balances and limits used in score calculations come from your credit report. Your creditors report account information to the credit bureaus every 30 days or so, which may cause the information in your credit report to differ from the amounts you see when logged in to your credit card account. END