Amount of Credit Card debt lowering score

[Anonymous]

I have a lot of Credit Card debt. Otherwise my credit indicators are "very good".

I do make regular monthly payments. Once I pay off the majority of the debt

shouldn't my score improve dramatically? I'm at an average of 680 right now. 

[Anonymous]

You need to get all debt to under 30% tuilization with an ultimate goal of getting all debt to under 9% utilization to maximize credit scores.  It is next to impossible to break into the 700's if you consistently run high utilization on your credit cards.

Good luck

[Chopbrocoli]

Yes. Paying it over time will incease your score as well as paying of the debt. When you pay off your debts, you will have a low utilization measurement. In the case, you will not be making heavy use of your credit. Therfore expect a nice jump in your fico score. I remember when I paid down on a couple of my credit card balances, I had a 37 points jump. Cheers.

[Anonymous]

I made a mistake and let a big balance hit my reports which took me from 1% up to 14% usage. My TU went from 710 to 680. Just going from 9% up to 10% usage can drop your score.

[mymoneynow]

l9ikjam- Wow, that much decrease for only 13% increase in Utilization? Anyone can easily run up 14% of the cards utilization just by charging a vacation to their CC.

Now, once you pay the utilization back down to under 9% or even back to 1%, do you expect the score to increase back to where it was, or can it be expected to increase a few points higher that where it was since you are showing the ability to repay the balance? (Just wondering and trying to still figure out this CC fico stuff)

IMHO, we need CCs to increase our fico scores, however we should not be penalized when we actually use them from time to time as needed, even if a larger balance suddenly appears. Now I could understand if suddenly we max out all CCs in one month's time. All of this is so confusing as well as enlightening. 

Message Edited by mymoneynow on 11-24-2008 05:10 AM

Message Edited by mymoneynow on 11-24-2008 05:10 AM

[marty56]

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@mymoneynow wrote:

IMHO, we need CCs to increase our fico scores, however we should not be penalized when we actually use them from time to time as needed, even if a larger balance suddenly appears. Now I could understand if suddenly we max out all CCs in one month's time. All of this is so confusing as well as enlightening. 

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You  can charge as much as you want as long as you play the FICO score game in which you control what is being reported on your statement.  If you cant PIF, your score will only drop as long as it takes to pay the balance to 9%.  I have not seen any difference between 1% and 9% and since FICO rounds up, $1 is as good as a full 9% of your total credit limit which is a good deal if you think about it.

Unlike say AE which allows you to charge based on past performace, FICO scoring has no memory of past usage which is fine by me.

Confusing, Very. Enlightening, even if we has a copy of the scoring algorithm, there would still be variables we couldnt control very well.

[Anonymous]

As soon as the paid balance hit my reports which took me down to 2% my score went right back up.

[Anonymous]

mickie has great advice below.  As a path to paying off cc debt, try paying your credit cards off twice per month.  Especially if you get paid twice per month.  If you can just double your payments so if you pay $200/mth now, pay $200/ twice per month.  As that may be too much, try paying off more than half, twice per month, so if you normally pay $200/mth, pay $125, twice per month.  People with 800+ scores generally have less than 10% credit card utilization.

[haulingthescoreup]

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mymoneynow wrote:

...Now, once you pay the utilization back down to under 9% or even back to 1%, do you expect the score to increase back to where it was, or can it be expected to increase a few points higher that where it was since you are showing the ability to repay the balance? (Just wondering and trying to still figure out this CC fico stuff)

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Your FICO scores are simply a snapshot of what's going on with your credit reports at the moment you pull your score. They don't have a memory for how the balance went up, and now it's back down again.

If nothing else changed on your reports, you should wind up at exactly the score from which you started. But since something's always changing (an account gets older, a baddie gets older. the number of accounts reporting changes, and on and on), you'll probably wind up at a slightly different score.