In part 1 of this series, I talked about paying off debt from the highest interest rate to the lowest in an effort to save as much money as possible. In part 2, I talked about a way to pay off debt that has more focus on making the person doing so feel a greater sense of accomplishment and give a little quicker gratification. Now, in the final installment, I will look at a third way of paying off debt that shows some concern for your credit rating.

It is no secret that having too much debt can hurt your credit rating. These negative effects are increased the closer you are to your credit limits. The way that the credit formulas work, if you have three cards with $5,000 limits, you are better off having $1,500 on each card than than $4,500 on just one card.

With these factors in mind, the process for using this third method is to start with the credit cards because they are generally referred to as the worst type of debt and can have the quickest and largest impact on your credit rating. List each card with it’s current balance and limit. Then, find the percentage of the limit that you are currently at by dividing the balance by the limit. Make the extra payment towards the card with the highest percentage and re-calculate every month.

Once the credit cards are paid off, pick one of the other two methods and attack the rest of your debt using one of those methods. This will help improve your credit limit quicker while still helping to pay off your debt.

Well, there you have it. Three methods of attack to pay off your debt. Which method you choose is not important and is mostly a matter of personal opinion. Pick the one that is going to work for you and use it.