Account balances near credit limit

[shanefer]

Hi all.  I'm trying to improve my credit situation and score.  I've taken some steps forward, and a couple of steps back.  At this point, I have five credit card accounts that are at least 95% of the account limit (balance of $900 on a $1000 limit for example), two that are at least 60%, and then a couple that are paid off.  Every time I check my credit report or score, I see notifications that I have too many accounts too close to the account balance, or not enough revolving credit compared to limits (something to that effect).

With regards to improving my credit score, am I better off continuing with a credit avalance/snowball and paying down the highest interest cards, or am I better off paying down all of the cards to a more reasonable percentage of use?  For example, get all 7 accounts down to 50%.  I don't know if the credit agencies look at grand totals, or if they look at individual accounts when they factor this in.  Thanks for any help.

[EW800]

You will likely get responses from some that are more knowledgeable than I am, however from what I understand the FICO scores look at both the total, as well as the individual amounts.  In total, I believe it is best to be at least under 40% or so, however most ideally under 10%.  As far as specific accounts, I believe it is most ideal to have as many as possible report $0, other than at least one reporting above $0, but less than 10%.  

Welcome to the forum!  

[notfancy]

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@EW800 wrote:

You will likely get responses from some that are more knowledgeable than I am, however from what I understand the FICO scores look at both the total, as well as the individual amounts.  In total, I believe it is best to be at least under 40% or so, however most ideally under 10%.  As far as specific accounts, I believe it is most ideal to have as many as possible report $0, other than at least one reporting above $0, but less than 10%.  

Welcome to the forum!  

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I agree.

It depends on what you're looking for, and how soon you want to apply for credit. If you are not as worried about your score but want to pay off your debt most efficiently, then the snowball method is best.

If you're looking for increases: You are considered "maxed out" when you hit 80% of  a card's total limit. So your best bet would then be to get as many of them under 80% as you can, then under 50-60 etc. Most credit card agents I talked to said they don't like seeing anything over 30% when reviewing accounts / making decisions.

For the best score you can get out of your credit cards you want all but one of them to be at 0 and that last card to be 1-9% of that card's total limit.

So there is really no clear advice to give til we know what you're trying to accomplish. Getting your cards paid off, saving interest etc, seems more beneficial to me than getting them all under certain amounts at this time.

[shanefer]

Thanks for the reply, that's great info.  I'm trying to both improve my credit score and also pay off the cards (while paying as little interest as possible).  After reading this, I'm going to work to first get all of my high balance cards down to 75% utilization and then go from there.  I'll have to re-assess my situation once I get there, but I'll probably then continue with the avalance and work toward getting them paid off.   

Thanks a lot for the info and the advice, I really appreciate it.

[EW800]

Congrats on getting focused with the plan!  You will get a lot of support here!  

When you get those balances down, it will feel great!  A few years ago I was basically owned by the credit card companies with such high balances.  You will find that it feels awesome to be out from underneath it - mentally and financially!  

Great job and best wishes!