CC Util & Impact On Score (Question)

[jbh]

Hey,

I plan to pay off my 2 ($300+ credit limit) cards from 90%+ util to 10% this month. I will also do the same for the crown Jeweler. My q is if the big jump in fico score will take place the first few months I do this or would it be over the course of a year or 2?

I didn't realize the impact on utilization until this month so I will stop using these cards altogether outside of a few monthly small payments.

Thanks.

PS. For specific detail the 3 cards are

Orchard Bank ($300+) at 90+ Util
First Premier - Same

New Crown Jeweler would need 60 days to report as it's just activated/etc

I never wanted credit cards but I realize it was a major mistake that I have made over the years and my fakos are mid 500's experian (will view fico's in early August)

[Anonymous]

The impact of paying down the CC will hit on the next statement date when it reports to the bureaus with the new balance.....

If this is the only debt you have then paying them down should help considerably.....some people have posted gains up to 70 points for paying down the utiliziation....

As I mention to everyone just make sure that once they are all paid off that you let one credit card report a small balance each month and you will gain points over time as you  PIF every month.

Good Luck!

[jbh]

Thanks for the confirmation.

I used the scorewatch from Equifax and it mentioned a fico of 638
and the score simulator mentioned it can get me into near 700 if I pay off the balance of both (more like 680's)

What a crazy concept that is for me. And they have yet to be updated on the $2500 Crown Jeweler account so I'll make sure to use it under 10% at all times.

[Anonymous]

May I be so kind to ask what does "Utilization" mean??

Tish!

[Anonymous]

When someone talks about Utilization or Util they are referring to the percentage of available credit they have verses what is used.

For example if someone has a $1K limit on the credit card with a $100 balance reporting to their Credit Report their Utility is 10%

[Anonymous]

Utilization is the fastest way to make credit scores go down (if you suddenly increase your UTL alot, say from 10% to 80%) or go up (if you do the opposite, from 80% to 10%).

Get it down under 10% and keep it there, along with paying all bills on time (never late) are the best and quickest 2 ways to increase scores.  Many of the other strategies will usually take time and age.

[jbh]

Thanks. Yeah, using the score watch simulate for Equifax (638 Fico) it mentioned that if I pay it off in one month it can boost 40-60 points (a bit more if I pay it off over time, although that's probably due to it factoring in aging)

I had no idea JUST how important paying it off was until I came here.

[Anonymous]

It all makes sense, actually.   The more of your credit limit you use, the more likely it is that you will eventually fall behind and eventually default.   This predictive opinion of Fair Isaac comes from reviews of literally millions of credit files over the years......