Understanding FICO® Scoring

[dpewitt]

OK. We have 6 cards now for a total of about 25K in CC debt on an available 27K so we are pretty full. I do have several cards with small 500-1000 balances so would I benefit from paying those down below 50% or does FICO just look at the total debt versus available credit?

[Justin_Bailey]

It looks at both overall credit and individual cards. I would recommend paying the smaller cards off below 50%. Also maxed out cards really kill your score, so if you have any of those try and get them below 100%.

[TheNewWorldMan]

Those high balances are definitely exerting a strong downwards pull on FICO...not to mention your wallet.

If you're paying 14.9% interest (typical for a credit card) on a $25,000 balance, that's about 1.24% a month. On $25,000, that's $310 a month. So don't worry about your FICO. Worry about that $310 a month you're throwing away on interest charges. Take care of that, and your wallet--and your FICO--will be fatter.

[Brammy]

---

TheNewWorldMan wrote:
Those high balances are definitely exerting a strong downwards pull on FICO...not to mention your wallet.

If you're paying 14.9% interest (typical for a credit card) on a $25,000 balance, that's about 1.24% a month. On $25,000, that's $310 a month. So don't worry about your FICO. Worry about that $310 a month you're throwing away on interest charges. Take care of that, and your wallet--and your FICO--will be fatter.

---

What he said.

[masdeocho]

Ditto.  There are two schools of thought for repayment:

1.  Pay off the cards with the highest interest rates first, regardless of balance.  Reason: the finance charges are increasing exponentially.

2.  Pay off the cards with the smallest balance first.  Reason: You get a psychological boost by getting to a zero balance faster.

[naima]

If you are really concerned about your Fico score, I would recommend that you pay down your lower limit cards to zero immediately and then work on paying down your cards with the larger limits (starting with the cards with the highest interest rates).  Remember, Fico largely considers the total number of revolving accounts with zero balances, so paying off those low limit cards will certainly improve your score.  Also, I'd recommend you create a strategic repayment plan and stay loyal too it.  All the best to you!