How much to pay down

[Anonymous]

I just  checked my credit scores after my student loans where payed off .  Great . Now I'm trying to raise my score in the high 7-8 range current scores are TU 718 EXQ 740 Exp 720 . They all have my credit card /Revolving debt ratio as being to high . Which American Express limit 3,000/ 2,100- Paypal 2,800/1,800- Capital One 2,000/1,200 . I don't see capital one listed on any of the 3 . So my question is how much is a safe amount to pay off ? I've been reading for awhile and if i'm understanding everything IS that i don't want to pay them off completely ? I have a cash reserve of 10,000 I been saving . I didn't want to touch this but if need to I will . Plan on the purchasing a home in the next two years .  So any help would be appreciated .

[RobertEG]

You can always recover under % util by getting the util down prior to when you will actually need your score, so monthly tweaking is not that important.

However, I would strive to always keep your % util under some value, such as 30%, that will not cause current creditors to consider a credit limit decrease, or will still keep you under consideration for a CLI, and which also will keep your util within range of being able to get below 10% if and when you are about to app for new credit.

[Revelate]

I'm in the camp of having a cash savings when you have a bunch of 20% APR CC debt hanging out makes absolutely no sense financially.  It certainly doesn't FICO wise.

TBH I would write the check for each of the cards, then use them normally and simply pay them in full each month.  When it's time to apply for the mortgage make certain 2 report $0 and the other has some small dollar amount on it.  Yeah there's a transient penalty if every single credit card reports $0 but TBH you can sort that just by letting a balance report next statement on any CC and you'll be fine.

Also if all your installment loans are now paid with the student loan payoffs (no auto or personal loan, or current mortgage if any) I would go pull the share secured loan trick though that's not as meaningful for mortgage UW as they don't use FICO 8, it does help the EX score there.

Method:
http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

Gory Theory:
http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Installment-tradeline-utilization-thread/...

[RonM21]

I like both of the suggestions above by Rob/Rev. I think you want to get to a.point.where you are keeping the percentages down, preferably one card reporting below 10%,.but not critical to have that one reporting as mentioned.

The shared loan trick is also a good idea, if you are looking to maximize your score based on the credit mix. You don't want to take on.something you can't handle though, so you'd want to be smart about it.

[bada_bing]

Another side issue to consider is restoring and maintaining the grace period on

the cards you use. Ideally, you want to adopt the behaviors of a transactor ( a PIF

type person) rather than a revolver (a balance carrier) because it pays in the long

term both in lower costs (interest) and in better treatment over time from credit

card companies. The grace period is one of the few "free lunches" you'll get from

credit card companies. Don't give it up to revolve balances that you have the free

cash to pay. 

[Anonymous]

Thanks guys I'm thinking about the Advice giving and i'll move forward in the next 2 months . Again thanks all

[takeshi74]

---

@Anonymous wrote:

Which American Express limit 3,000/ 2,100- Paypal 2,800/1,800- Capital One 2,000/1,200 . I don't see capital one listed on any of the 3 . So my question is how much is a safe amount to pay off ? I've been reading for awhile and if i'm understanding everything IS that i don't want to pay them off completely ?

---

Do the math.

$2,100 / $3,000 is 70%

$1,800 / $2,800 is 64%

$1,200 / $2,000 is 60%

You should know your limits and reported balances even if the other accounts don't show up.  Keep in mind that 30% is the generally suggested maximum.  It is far from ideal.  It is just a suggest maximum.  Lower is generally better with optimal being typically well under 10%.  The 3 accounts you've listed are very high and you need to get them down as quickly as possible.

You're confusing "don't allow all your revolving accounts report 0 balances" with "don't have 0 balances".  Don't conflate the two.  You do not need to carry a balance for scoring purposes.  You can pay your statement balance in full and still have a balance report.  If you're paying the statement balance in full by the due date for an account but after it's report date then a balance will report even though you're paying the statement balance in full.

Also don't conflate statement balance with current balance.

---

@Anonymous wrote:

I have a cash reserve of 10,000 I been saving . I didn't want to touch this but if need to I will .

---

Is that earning more than the interest you're paying on your revolving accounts?

[Anonymous]

---

@takeshi74 wrote:

---

@Anonymous wrote:

Which American Express limit 3,000/ 2,100- Paypal 2,800/1,800- Capital One 2,000/1,200 . I don't see capital one listed on any of the 3 . So my question is how much is a safe amount to pay off ? I've been reading for awhile and if i'm understanding everything IS that i don't want to pay them off completely ?

---

Do the math.

$2,100 / $3,000 is 70%

$1,800 / $2,800 is 64%

$1,200 / $2,000 is 60%

You should know your limits and reported balances even if the other accounts don't show up.  Keep in mind that 30% is the generally suggested maximum.  It is far from ideal.  It is just a suggest maximum.  Lower is generally better with optimal being typically well under 10%.  The 3 accounts you've listed are very high and you need to get them down as quickly as possible.

You're confusing "don't allow all your revolving accounts report 0 balances" with "don't have 0 balances".  Don't conflate the two.  You do not need to carry a balance for scoring purposes.  You can pay your statement balance in full and still have a balance report.  If you're paying the statement balance in full by the due date for an account but after it's report date then a balance will report even though you're paying the statement balance in full.

Also don't conflate statement balance with current balance.

---

@Anonymous wrote:

I have a cash reserve of 10,000 I been saving . I didn't want to touch this but if need to I will .

---

Is that earning more than the interest you're paying on your revolving accounts?

---

Nope it isn't . Point taken .