Understanding FICO® Scoring

[OntheHorizon]

Used some of my refund to get a handle on some of this debt, how much of an increase can I expect? 

1. CC  6660/7600, now 6078

2. CC  3108/3500, now 2767

3. CC 3083/3500, now 2788

4. CC 1314/1800, now 985

5. Loan 1050, now 899

6. CC 724/1000, now 688

7. CC 810/1000, now 681

8. CC 314/800, now 278

Ultimately, besides becoming debt-free, I'm looking to refinance my auto (currently at 9.250%) for a better rate.  I still have about $1000 I could use to pay on something, but my savings is virtually non-existent so I'd like to keep that, UNLESS it would make a serious increase in my scores.  Any info you can give would be very helpful.

[MarineVietVet]

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OntheHorizon wrote:

Used some of my refund to get a handle on some of this debt, how much of an increase can I expect? 

1. CC  6660/7600, now 6078

2. CC  3108/3500, now 2767

3. CC 3083/3500, now 2788

4. CC 1314/1800, now 985

5. Loan 1050, now 899

6. CC 724/1000, now 688

7. CC 810/1000, now 681

8. CC 314/800, now 278

Ultimately, besides becoming debt-free, I'm looking to refinance my auto (currently at 9.250%) for a better rate.  I still have about $1000 I could use to pay on something, but my savings is virtually non-existent so I'd like to keep that, UNLESS it would make a serious increase in my scores.  Any info you can give would be very helpful.

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You've gone from 83% utilization to 74%. It's always good to reduce debt but I'd guess any score increase would be small. 74% is still very high. The reduction in the loan balance from $1,050 to $899 does not factor into revolving utilization. Plus FICO looks at individual card utilization as well as overall utilization.

You also are being hurt by having too many accounts with balances. FICO gets nervous about that. Try and get to the point where less than half your CC's are showing a balance and remaining cards only report 1-9% utilization each month.

Optimal credit utilization for FICO scoring purposes seems to be:
Total revolving utilization > 0 and < 9%, the lower the better, and
Reporting a balance on less than half of your revolving TL's, and
Reporting a balance on half or less of all TL's.

Don't drain your savings. Keep it for emergencies not related to debt. Put as much extra money as you can each month into balance reduction. I would concentrate on the cards with smallest balances first to get those to zero fastest. You'll get other opinions about this. Use what you think will help you the most. Remember that there is often no quick solution but if you keep at it you can get those balances down.

Good luck to you.

From a BK years ago to:
7/09 TU-742 EQ- 779
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802

You can do the same thing with hard work.

Message Edited by marinevietvet on 02-07-2010 03:45 PM

[marty56]

Based on what else is in your CR, it is possible you could gain 50 -100 points by paying all your CC debt off.

[ByrdMan]

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OntheHorizon wrote:

Used some of my refund to get a handle on some of this debt, how much of an increase can I expect? 

1. CC  6660/7600, now 6078

2. CC  3108/3500, now 2767

3. CC 3083/3500, now 2788

4. CC 1314/1800, now 985

5. Loan 1050, now 899

6. CC 724/1000, now 688

7. CC 810/1000, now 681

8. CC 314/800, now 278

Ultimately, besides becoming debt-free, I'm looking to refinance my auto (currently at 9.250%) for a better rate.  I still have about $1000 I could use to pay on something, but my savings is virtually non-existent so I'd like to keep that, UNLESS it would make a serious increase in my scores.  Any info you can give would be very helpful.

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A quick approximation shows me that you paid roughly $2,000 in debt. IMO, you would've gotten more bang for the FICO buck by paying off 6, 7, & 8 with those dollars. Individual util does count.

[OntheHorizon]

Thank you for responding.  My reason for not just paying a few things off was because those CC with the lowest balance of course have the lowest monthly payments, so they don't impact my daily finances too much.  It's the CC with the higher balances that of course have the greatest impact on my paychecks.  So I was trying to get the minimum monthly payments more reasonable while hopefully increasing my score at the same time.  I hope I explained that well enough.  I guess I should have sought out guidance here first before I made all those payments.  I guess only time will tell what mileage I get from making those payments.  Either way, thanks for responding.  BTW, do you think I shoud just go ahead and pay off that lowest CC?  Or, should I just suck it up and pay off one of the 600 balance CC?

[ByrdMan]

If your goal is FICO score increase, I would pay off the lowest one and as much as the next lowest one as possible. You can always use the snowball effect to get the others paid off.