My wife and I are in the middle of trying to get positoned for a mortgage...both have mid scores in the 640's. We decided to go ahead and payoff all our CC down to a zero balance but now Im worried because some people are saying that all zeros got have a negative effect. Should we place a balance on a card of hers and mine? Simulator shows a increase up to the 683-703
no, you will probably see big jump because your taking reports that had balances on all cards (or however many) to all cards reading 0. it's just long term if all accounts read 0 you will start to see negative feedback because there is nothing to rate if it doesn't look like your using your credit.
You'll get the nice big boost from the paydown, but it might be a couple of points shy of where it would be if one card had a balance.
FICO scoring doesn't have a memory, so there isn't a cumulative period resulting in a score drop. The one time I tested this with my cards, the drop was immediate, and it reversed as soon as I let one card report again.
It's not a huge figure by any means --probably under 5 points for most people, but when you're scrambling for every point you can get, it can be important.
When you choose which card to allow to report a balance --and make it small, like $10-20 --pick one from a bank that updates promptly, like BofA, Chase, Citi, etc. Don't use AmEx, HSBC/Orchard, and some store cards, which have been know to report slowly.
And whatever you do, after the balance reports (generally on the date that the statement drops), don't forget to pay the remainder. It's easy to forget, and you can get a late charge this way.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit? FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007