Which accounts to start paying off when you have bad debts

Dear Experian,

How do I know which debts to go after to reduce my bad credit?



Dear EBT,

The answer is that you must “go after” all of them. It doesn’t really matter where you start. In order to improve your creditworthiness, you must take control of your personal finances, including all of your existing debts.

There are a couple of approaches you can take. Some recommend starting with the account that has the highest interest rate. Continue to make minimum payments on all of your other accounts and put as much additional toward that account as you can until it is paid off, then move on to the account with the next highest interest rate.

Another approach is to start with the account that has the lowest balance. Once it is paid put that amount toward the debt with the next highest balance, always making minimum payments on your other debts.

A third option is to start with the credit card that has the highest balance. Like the other options, once it is paid, put that payment amount toward the account with the next highest balance, and so on.

Starting with the highest interest rate will usually save you the most in the long run. Starting with the highest balance will knock out the biggest debt and let you put more toward the small debts, but could take a long time to get that first debt paid. Beginning with the smallest balance can give a psychological boost by getting it paid off quickly.

Choose the option that suites your personality best. The key is to get started and then to stick with it. With patience and persistence you can take control of your debts.

Thanks for asking.

- The “Ask Experian” team

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