Advice... increase utilization or get new loan?

[Anonymous]

Thanks to everyone on this forum I'm closing on a new house in a couple weeks and have a quick question on utilization.

My fico 8 scores are all in the 760-780 range, have a lot of recent inquiries from the mortgage process, and am at about 1% utilization of around 110k in available credit.

In the last six months I've gotten 5 new "real cards" (Amex,Citi,chase,cap1,) all 20-30k limits. So I'm fine on cards my plan is to cancel some of the dreaded ones I had to get to make it this far, after closing (first premier, credit one, etc).

So here's the question, with my scores as they are, I doubt I'd have any problem getting the 0% finance deal the furniture store is offering. Probably dumping about 30k once I close on furniture and some incidentals for the new house.

Would it be better to take a hard pull, open a new line of credit with them and keep my utilization low, or better to use some of my cards, rack up about 30% utilization, and pay it all
Off in the next 9 months?

[AverageJoesCredit]

30% isnt that bad and if you are going to pay it off within next 9 months i say just use your current cards. Thats why we have credit cards, to use when needed. Who knows, you using your cards and paying them responsibly may help you down the road fet some additional cli which in turn would help your utilzation. Just Joes Average Credit thoughts for today.

Congrats on your new home

[HeavenOhio]

It depends on what the 0% finance deal is. If it turns out to be a maxed out credit card, use what you have. If it's an installmant loan with a real bank rather than a finance company, you might want to take the deal.

[Anonymous]

Use what you have already to get the things you need, putting it on the cards with the most available credit and best APR's, while keeping your utilization as close to 30% as possible, and follow your plan to pay it down over the following 9 months.

[Anonymous]

Thanks to everyone for the feedback. It's funny, my old attitude towards cards would've been just Max them all out and worry about it later 😂 Now I'm worried about going to 30% utilization using the cards for what they were meant for lol!

After the mini app spree a few months back I planned on gardening for the foreseeable future, so as opposed to taking the new loan I'll more than likely use the cards and keep from getting a new loan.

But I will look into the installment loan aspect of things heavenohio thanks for mentioning that info! And as mentioned as long as I pay them off relatively quickly it may very well help me for a cli down the road.

[MrDisco99]

I'd say it depends on the interest rate you have on the card.  If you're still within the intro period and have 0% for the next 9 months or whatever then yeah you could put it on the card and pay it down as you are able without even having to worry about paying the same amount each month.  If, however, your card has a real rate then you're almost certainly better off getting a loan since credit card rates are usually pretty terrible.

[happypill]

Amazing...utterly unbelievable that people are actually suggesting paying interest on an existing card and increasing utilization rather than using 1 inquiry to get a 0% rate.  Impact of 1 inquiry on your credit report is basically not measurable.  Interest paid is actual real money that you could trade for tangible goods or services.  Increasing util from 1% to 30% will have a very noticeable impact on your score.  The weight that many people around here put in inquiries is mind boggling.  The obvious answer is, if you can avoid paying interest by taking one inquiry, then do it.

A better strategy would probably be to utilize that one inquiry and apply for a new card with a nice sign-on bonus (you have $30k spend coming up so that's no problem) along with a 0% intro offer.  I'm not sure what the best current offers are, but I did recently get a Citi Hhonors card with 75k points and 18 months of 0% as well as a Citi AA card with 60k points and 18 months of 0% and a BofA Travel Rewards with 20k points and 12 months of 0%.  I also recently got a US Bank business card with $750 total bonus for $6500 total spend within the first 8 months and 21 months of 0%, but that was a targetted offer - you might consider looking through the marketing emails from your existing lenders to see if any of them are offering anything interesting.

The optimal strategy would be to pick out 3-4 offers if you can find them and spread out your spend across them.  For $30k spend you could easily get a thousand dollars or several in value in exchange for 3-4 inquiries and new accounts.  I'm in the same score range as you and I took 3 inquiries last week (1 TU and 2 EX) and my scores did not change at all.  Not one single point.  Depending on what your AAoA is and how many accounts you have open, 3-4 new accounts could result in a small score drop due to lower AAoA, but it will be a temporary drop and you'll be stronger going forward.  I've got 30+ accounts open so when a new account posts I generally see an impact of 0-2 points on each report.

[Anonymous]

As far as inquiries go, @happypill, I find that I agree with you. I really don't get why some people here seem to be so antsy about HP inquiries. If you're only applying for a few cards per year, or one or two cards every several months, it really does seem to me that the impact on one's credit score would be negligible, particularly since it fades off the credit report in a very short period of time compared to much more serious things like chargeoffs, serious lates and bankruptcies. Moreover, issuers have to have a complete picture of your credit history if they're going to make an informed judgment on your application for a credit card or other loan, and how else are they supposed to do that except by getting a copy of your credit report, thus producing the dreaded hard pull? Let's say you apply for a credit card and are approved with a HP, then four or five months later you apply for another CC and an auto loan, and are approved with one HP each, and then six months later you apply for another credit card and get another HP. That's four inquiries spaced out over ten months; I fail to see how that's excessive, unless I'm missing something.*

Then again, I see that if one is applying for a lot of cards within a short period of time, or requesting a large number of CLI's, or some other behavior involving a lot of money going around, one would be nervous about the impact of multiple inquiries in a very short space of time.  However, my question then would be; if that's what's going on, is it truly the smartest and most responsible type of credit-related action that one could be doing?

*In fact, this is close to my own current situation. I have anywhere between three to five inquiries on my various credit reports, depending on bureau, from the past 16 to 17 months, spaced out over that time period. By the time I emerge from the garden in September to go looking for my next card, that will have stretched out to 3 to 5 inquiries depending on bureau in 20 months, and all of those inquiries will be at the absolute minimum five and a half months old with the oldest being close to 21 months old and pretty much faded out from my reports for all practical purposes. If this translates to a number of inquiries that an average lender would hyperventilate at and go into a panic over upon reviewing my entire history, then I must really be missing a part of the puzzle.

[SouthJamaica]

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@Anonymous wrote:
Thanks to everyone on this forum I'm closing on a new house in a couple weeks and have a quick question on utilization.

My fico 8 scores are all in the 760-780 range, have a lot of recent inquiries from the mortgage process, and am at about 1% utilization of around 110k in available credit.

In the last six months I've gotten 5 new "real cards" (Amex,Citi,chase,cap1,) all 20-30k limits. So I'm fine on cards my plan is to cancel some of the dreaded ones I had to get to make it this far, after closing (first premier, credit one, etc).

So here's the question, with my scores as they are, I doubt I'd have any problem getting the 0% finance deal the furniture store is offering. Probably dumping about 30k once I close on furniture and some incidentals for the new house.

Would it be better to take a hard pull, open a new line of credit with them and keep my utilization low, or better to use some of my cards, rack up about 30% utilization, and pay it all
Off in the next 9 months?

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Just use the credit cards.