Hope this is the right forum to ask this. I'm planning on applying for a new cc with a good bonus offer. I just took out a large $$$, low interest loan on a credit card (4% APR) for down payment on a house. I owe $5500 on a car which is a 0% loan. Payment is about $550 a month so it will be paid off in ten months with the regular payments. My question is, I have $5500 to put towards either the credit card or the car loan. Financially, it makes sense to put it towards the credit card, but would paying off the car be better when it comes to applying for a new credit card? I have good credit and the only two cards I have applied for in the past year were the BA Visa (April 2010) and AMex Premier Rewards Gold (June 2010). Thanks!

I believe that credit card issuers look at unsecured debt (credit cards) differently than secured debt (car loans, mortgages) so I'd pay down the CC.

"the man's too big / the man's too strong" . . . sorry, couldn't resist some Dire Straits.

If your credit score is good, it may not matter which loan you pay down -- you may get your CC approval either way. In that case, it would make sense to pay down whatever has the highest rate.

CreditKarma.com gives you a free (approximation of your) credit score. Other sites give you free trials but you will have to provide a CC# and remember to cancel before free period ends. If you are in the 700+ range, you will likely have good luck with your CC application.

Gotta luv those scores - mine's rising with a strong rise in credit utilization, cards open and total debt (that strangely zeroes out each month). Gotta go on a coin diet for my New Years Resolution.

CreditKarma.com gives you a free (approximation of your) credit score. Other sites give you free trials but you will have to provide a CC# and remember to cancel before free period ends. If you are in the 700+ range, you will likely have good luck with your CC application.[/QUOTE]

Best to put it towards the (unsecured) CC no question about it. In order of credit mortgage is great - helps your credit score. My credit score actually dropped 10 points when I paid off my mortgage. Active car loans are basically neutral towards your credit score from what I have seen. What I mean is I have seen no change in my credit score when paying off a car loan in the past.

For credit cards what I have seen is if you are close to your credit limit on any card (regardless of how much or little the limit is), this is a red flag and negatively affect your score.

Since you are paying interest on the CC and not on the car this is a no-brainier to me as to where to apply the additional payment.

Not really. My Credit Karma score is 787 and I keep getting declined for credit limit increases and new credit cards due to high CC balances. Creditors are looking at the whole picture now, not just the score.

Great info as usual. Looks like cc it is. And thanks for the Dire Straits referece!