My credit card balance went from $319 to $271, and Experian FICO Score 8 went up 8 points?

[Anonymous]

Instead of the minimum $25 payment, I paid $50 on my credit card, and my Experian FICO Score 8 went up 8 points. Utilization went down from 21% to 18%

Why is that?

I wonder if this is what a senior mortgage loan officer was trying to tell me to do to raise my credit? I have read so many thing about how to raise my credit scores. This loan officer said to charge $50 on my cards, then pay the minimum after the balances post, to raise my credit.

I have attached a screen capture of what a person on this forum said. It has to do with charging something on all cards, but paying off all but one card before the balances post to credit bureaus, and keeping the one balance at 9% of credit limit. I think the 9% raised my FICO 8 score 3 points with one credit bureau everytime I did that.

What credit hacks really work with FICO?

It's confusing to see when I carry a balance on a card, and pay more than the minimum, that I get an 8 point increase.

I know about keeping it under 30%, but even better to keep utilization under 10%, but does that mean every card as a whole? I mean do I try to keep all cards at a balance that equals 9% utilization of all cards together?

[Anonymous]

It sounds to me like you are (a) trying to buy a house and (b) are kinda new to the world of credit scoring.

So in what follows I'll try to make things really simple and all about scoring for mortgages.

(1) You mention your FICO 8 score.  FICO 8 is not used for mortgages.  Instead you will want to see your FICO mortgage scores. 

(2) You mention wanting to buy a house.  What is your timeline for doing that?  What's a realistic best guess as to when you'd be going through pre-approval and then when you would close on the final property?  Again, best guess.

(3)  You mention credit cards.  How many do you have?

(4)  The simple rule for mortgage preparation is to pay all cards down to $0 except one and then leave them there.  The remaining card should be a true credit card (not a charge card) and a card in your name (not an AU card).  It should be reporting a small positive balance, like $10, $15, etc.

If you have time (see #2) I would make sure that you have all of your cards reporting perfectly on your credit reports, and then after that pull your mortgage scores.  The reason is that it costs money to pull your mortgage scores.

(5)  You should also make sure that you have some free tools to frequently pull your three credit reports.  Credit Karma is a good choice for TransUnion and Equifax.  Just only use Karma for the reports -- ignore its scores and any advice Karma gives you.

[HeavenOhio]

Your loan officer is correct that with one card, you should be reporting a small balance. Between $5 and 8.9% of your limit is best for scoring, although 18% and 21% are still both reasonable. A balance of zero will ding you.

But you don't need to pay interest in order to pull this off. You can pay your statement balance in full and allow the next statement balance to come from new charges. FICO doesn't care whether you pay interest or not. All it wants to see is the small balance.

The issue at some point is that you're going to want to get the interest to stop. But you don't want to rock the boat during the mortgage process by reporting a zero balance to reset the grace period. You may be best off continuing to pay a small amount of interest until the mortgage closes and cutting a zero balance after that. I've never had to reset a grace period. Maybe someone who's been in that position can chime in with options.

[Anonymous]

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@Anonymous wrote:

(2) You mention wanting to buy a house.  What is your timeline for doing that?  What's a realistic best guess as to when you'd be going through pre-approval and then when you would close on the final property?  Again, best guess.

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All the questions I asked you are important, but the one above is especially so in terms of getting the best advice.  HeavenOhio is guessing that you may be in the final stages of underwriring.  That could well be the case, or maybe you spoke with a loan officer in an informal way about a house purchase you might make six months or more from now.  I couldn't tell (though perhaps I missed it).

Heaven gives great advice around here.  Answer the questions I asked and we'll be able to help you best.

[Anonymous]

My best guess is 6 months to a year from now. Thanks for you help.

[Anonymous]

Awesome.  Is paying all cards down to zero (with one remaining card reporting a small balance) financially doable for you?  If so, when do you think you could do that?

Also, how many cards do you have?

[Anonymous]

I could pay off all my cards today if I wanted, though I only have 1 card with a balance now.

I have 4 credit cards. 

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@Anonymous wrote:

Awesome.  Is paying all cards down to zero (with one remaining card reporting a small balance) financially doable for you?  If so, when do you think you could do that?

Also, how many cards do you have?

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[Anonymous]

I know the FICO 8 score is not what's used by mortgage lenders, I'm am just confused how a person on this forum said to keep my balance at 9% for one credit card (but pay it off after it post to credit bureaus, but before it is due, while I pay off all other cards to $0 before they report to the credit bureaus). I bought a memory foam matress a couple months ago, and have been making more than the minimum payment, and my score went up 8 points (even though I am being charged interest. Even that a lot of info on the web says to always pay it off before due date).

I am familar about the many different FICO Scores for mortages, credit cards, auto loans. It just doesn't make sense how I can have a credit card balance that I am slowly paying off, and then get an 8 point increase. Yet if I tried to do what a memebr on this forum said to do, I think only one of my credit bureau FICO Scores (FICO 8 that is) goes up only 3 points when using that members advice (Screen capture of that members reply was included in my first post in this thread), as opposed to 8 points increase.

I also noticed that my Trimerge Mid Score was diffrent than myFICO mortgage mid credit score (I think it was 20 or 30 points higher than myFICO mortgage mid score). I am pretty sure it comes down to a specific banks guidelines, mixed with who they buy your Trimerge score from.

My myFICO mortage credit scores are: Equifax FICO Score 5: 651, Transunion FICO Score 4: 696, Experian FICO Score 2: 702, just so you know what I am working with.

[Anonymous]

I also find it funny, yet confusing how my score I can get a myFICO "The balance on one of your accounts has increased by $18" increases my FICO 8 score 11 points for 9% to 10% utilization, from a balance that went from $135 to $153 on a credit card with a $1500 limit. But a decrease in a balance can raise my FICO 8 score 8 points (same credit card with $1500 limit. How does that work? One might think you could pay down a balance over time to get a nice boost in score, and sometime increase the balance to get an ven bigger boost...ughhh!