Best cc payoff method for credit score increase

[witt]

I'm trying to figure out the method to pay down credit cards that will have the best short term credit score increase. I have been paying all bills with credit cards except rent and making sure that I at a bare minimum have a net decrease on any card that I use, even if it's a buck. This saves me interest and earns points which I've already redeemed for two $100 cash back payments which went right on cards. This method I've been able to pay my debt down about $1000 a month.

It's worked the last year, a year ago I had most cards maxed, some well over, and overall usage was 102%. This year my total balances are 13394 and total limits are 26440 for a 51% usage. I've had some cards increase my limits which has helped utilization as well.

I have 24 cards total counting store cards, gas cards, and Mc/visa cards. 9 have no balance, these have limits ranging from 300 to 1500 (ie: i've killed all the little card balances). 8 have balances from $4 to 500, and all of these are between 1% and 35% usage. Then come the bigies.

Paypal 512 bal/ 770 limit

visa 776 bal/ 1000 limit

mc 1747/2500

store 1791/1900

visa 2119/3000

visa 2153/2500

dept store 2730/3200

these are in the 70-90% usage range.

I've heard that carrying the zero balance on several cards actually hurts your score (is that true??) and that it's better to have usage between 1%-20% on ALL your cards. I have been using them and paying the off every month, then paying as much as I can on the larger cards. Like I said, the score has been slowly increasing, but has kinda leveled off. I could take larger chunks out of the larger cards if I went to carrying a 15-20% balance on the smaller cards (ie pay half of the balance and use the rest on the bigger cards), but would taking cards that show as 0 balance on my report, and suddenly showing a balance to bring the high usage on high cards down hurt my score? cancel each other out? or would taking a single 90% usage card down to say 60% at the expense of balances showing up on "paid off" cards give a net increase on my score.

I can't "try it" and see how the score responds at this point. I have a purchase agreement in place for the house I'm currently living in and the seller wants me to get rolling with the purchase, or cancel the deal. The mortgage company gave me a list of what they are looking for last year prior to going for the loan (2 years on the job, no new deliquincies, no cards over limit, etc), and I have everything in place except the minimum 650 credit score (currently at 621 exp/622 TU/632 Equ...last year, was 556)

I know that if I keep doing what I've been doing, these will all be paid off within a year or so, but I need to have the mortgage processing in the next few months.

[Revelate]

Welcome to the forums!

Couple random tidbits:

You want as many balances reporting 0 as you can, but not ALL balances.  One credit card (revolving tradeline) or more should report a non-zero balance (for max FICO, less than half your cards should report a balance, 1 is easiest and maybe best); if all of your cards report zero, that is indeed a negative.

Short-term:

Any credit card >90% utilization should be paid to under 90% (maxxed out tradeline penalty, think it's 90% not 80, someone will correct me if I'm mistaken, lower is better anyway).

Any credit card near zero, pay it to zero and just toss it in the sock drawer for a while.

Longer term, I'd simply chase after the highest APR first but doesn't sound like you have that sort of time.  If you can qualify for the mortgage based on DTI, you might consider seeing about a personal loan from a CU (or even some place like Lending Club) and using that to airstrike your credit card balances for quick benefit.  The APR might be ugly but it doesn't count as much against you FICO wise, but it will hurt your income qualification potentially.  Likewise if you have an asset like a car or other, may want to try to take a loan of some sort against that to pay off your credit card debt as that is apparently depressing your score quite a bit.

Given your time constraints you're going to have to make some tradeoffs most likely.

[witt]

Thanks for the reply. I will never have all cards with a zero balance because there's a couple with an annual fee charged monthly, so one will show $3 and one $4 every month so no worries there.

I can pay all the cards over 90% to under 80%, but ONLY if I don't pay off the cards that were paid off last month 

I guess my main question is would it be better to pay down the high cards and not have the zero balance cards (I currently have 4 with no balance, but I need  $2400 to pay the rest of cards that HAD a zero balance last month off), and get the other handful under 80% usage. I will have about 2900 when I get paid tomorrow, so the options are pay the cards off that I can and put $100 on each of the 5 high cards, or put some on the cards that were paid off (so all are back under 20%) and put a larger dent in the high cards (ones over 90, to 80, one is 76% i can take it down to under 70, etc)

I know that you lose some points for having >90% usage on single cards, but would I lose MORE if I went from 15 cards with no balance to 4. Either way, i'll have a net decrease in overall balance and most likely my credit limit will be increased on a card or two because I'm getting line increases fairly constantly due to my improving score. Sock drawering more isn't possible because as I said, I make every day purchases with these cards then pay them in full before the new statement comes out.

[Revelate]

Don't know regarding which is the bigger hit: they're both negative.  If you had more time I'd suggest trying it and see as I admit to being curious on it .

Have to ask though, with 24 cards, what are you doing with cards that have a monthly fee associated with them?  Close those: they're only useful if you're trying to get initial credit cards and don't have the money for a secured deposit (or something ugly like a judgement on one's reports... even then I'm not sold on FP / CreditOne / similar), and any card which is guarunteed to report a small balance, hurts your overall report in your case.  In theory you might be able to overpay it by some amount and the monthly fee eats the negative balance, but honestly just kick them to the curb as unnecessary.  Out of 24 you've got to have better cards to the point where you don't need those and more cards isn't necessarily better from a FICO perspective beyond the first card.

In your credit strata (or mine FWIW) no revolving utilization negative is going to hurt you that badly short-term: end of the day the utilization is what's hampering you from the looks of it by likely enough margin to get your score where you need to for mortgage qualificaiton.  Keep paying down your debt, personally I would get everything below 80% or whatever before I worried about how many cards are reporting a balance.