Which of the 3 ways to improve your credit score?

My brother's credit card score is a "C" no past due amounts, but he owns his own business and all the credit cards are very close to the max amount owing. Even though he pays every month on time, the interest rate went very high because of the debt to income ratio. So would it be better to try and get all the credit cards balance owing less than 50% of the total credit available or pay off the higher interest rate card first or the debt-snowball method. What would be the best for start getting approved for low interest credit cards? For years he had credit cards to run his business with low interest rates, but as soon as his balance owing got close to the maxium amount of credit available, his interest rate went sky high. I have been told to pay off the higher interest rate card first, but then other people told me to tell my brother to get all the credit cards below 50% of the total amount of credit available to improve his credit card score.

Public Comments

1. From a financial standpoint your brother should pay off all of his higher rate debt first. While paying each of your credit cards down to 50% or less is very important your brother will still see great benefits to his credit score and his financial situaiton by paying down the higher rate credit cards first. Overall, his amount of total credit limits for all of his cards compared to his balances will still improve which will still help him out tremendously. See the credit scoring blog below for more credit tips.
2. Ok, so your brother has a few problems... The credit cards themselves are hurting his credit like you said. But in order to raise his score to the point where the interest rates would drop each card would have to be lower then the 50% mentioned. Most lenders tend to look for no more then 15%-30% of the balanced owed and so the credit score reflects that. Tell him to make the largest payments possible on all of them to help his score the most.
3. You know, this depends on what he wants to do. If he wants to get out of debt as quickly as possible, it is better to pay off the lowest balances first, one at a time...or to start with the card with the highest interest rate and pay that one off first. However, be sure to tell him NOT to close his accounts because this will bring his score down. Now, if he wants to get more credit, or a home loan, the best thing he can do is to pay all his balances to below 50% of what he owes. This will bring his credit score up quite a bit and give him a chance to get more credit. If he's trying for a home loan, his debt to income ratio should be based on what he tells them he makes. The more he says he makes, the lower the debt to income ratio. Basically, this only comes in handy if he's buying real estate. His best bet for credit cards and other loans is to just get below 50%.