@Anonymous wrote:I've tried to search this topic and I'm sure it's covered on here somewhere - I just couldn't find it. I have a hypothetical question re: the subject line...
Card 1 has a $6000 CL with a $0.00 balance
Card 2 has a $1500 CL with a $0.00 balance
Card 3 has a $5000 CL with a $0.00 balance
Card 4 has a $2500 CL with a $1900.00 balance
Unfortunately, Card 4 has a 3% cash back on ANY purchase so I use it for literally, almost ANY purchase I make, across the board, which none of the others offer. I nearly max it out every month then PIF because I'd feel foolish budgeting myself any other way. Why throw away 3% CB, right?
So, obviously, in the above example, the overall utilization is stellar but Card 4 is often showing an over 50% utilization or more depending upon when the CR is pulled. As far as the obvious, a CLI request, it's an Amazon Chase Visa and my newest (like 3 months old) card...I couldn't resist the 3% CB and 5% for anything purchased on Amazon.
This puts my in a conundrum as far as I can tell from what I've read here in general about CU and its importance. I'm hoping to apply for a VA home loan very shortly. Do I have a problem here or not? If so, ideas on how to solve it are welcome. I'll just hang up and listen and thank any and all in advance for your answers.
1. It doesn't pay 3% cash back on everything; I don't know where you're getting that idea from, but it's not so. It pays 3% or 5% on Amazon.com; otherwise it pays 2% on 3 categories & 1% on everything else.
2. Credit card utilization has no memory. So all you have to do is pay your card down to 9% and let it report before you apply for the mortgage. I.e., you only need to worry about it about a month and a half before the application.
3. But frankly, if I were you I'd get my priorities straight. Getting a few extra nickels and dimes back on a cash back card is not something you should even be thinking about at this time; you should be solely fixated on maximizing all your scores, especially your mortgage scores. Because a slight difference in interest rate can make a huge difference in your pocket when dealing with mortgages.
@Anonymous wrote:Sorry, I had my cards and my CB percentages mixed up. I get 2% CB on every purchase with my PenFed Power Cash Back card, being retired military, which is a requirement (or active military) I believe. In my OP, I was throwing out a hypothetical. All cards have small balances but my plan is to have those down to zero bal within the next four months, which is about the time I hope to apply for my VA home loan. Thanks to all for your feedback so far.
Don't have all 4 report a zero balance; let one of them report a small balance.
HeavenOhio wrote:
FICO is going to like:
- Your overall utilization of 13%. (It'd like an overall utilization of 8.9% or less even better.)
- The fact that only one of four cards is showing a positive balance.
FICO is going to dislike the fact that you have a single card with 76% utilization.
If Card 4 is the one that you typically use, I'd make a payment a couple of days before the statement cuts. If you bring your current balance down to $5, you should be able to continue to use the card normally and still end up with decent utilizaition once the statement cuts.
If you're applying for a loan, don't ask for a CLI on a Chase card at this time as the request will generate one or two hard inquiries. Wait until after the loan has closed. If soft-pull CLIs are available on your non-Chase cards, you can go ahead and request them.
In addition to makig the payment quoted above, I would find out when the card reports to the credit bureaus and pay the amount currently owed about 1 or 2 days before it is reported to the credit bureaus. I have found that it is not enough to help utilization by paying only before the statement cuts.
Also, don't apply for any more credit cards until after your mortgage has been approved. The companies like no card applications at least 6 months prior to applying for a mortgage.
