New to the game , I appreciate your input

Anonymous · ‎03-25-2017

Good Morning,

I am new to the myFico world and come from Identity guard. My wife and I just relocated to a new city and this has allowed me to be in a better financial position. That being said I have a small surplus that can eliminate all of our cc debt in one hit. After looking at the forum there are several different opinions of debt and utilization ratios. My questions is if my wife and I's overall credit debt is 15k what percentage of the debt should be let ride on the cards to reap the best rewards via the score increase? How much should I charge on them monthly etc....?

I appreciate everyone's input and hope to see you guys at the top, 800 club here we come.

God Bless,

HeavenOhio · ‎03-25-2017

If you have the cash, don't let any of it "ride." Pay it down in full so there won't be interest.

However, for scoring purposes, it's best to let a small balance report on one card. This needs to be a new charge that hasn't previously been "due." Pay that right after it shows up on the statement. Make sure that your new balance is at least $5. Sometimes, card companies will forgive small balances and report zero.

Anonymous · ‎03-25-2017

@Anonymous wrote:
Good Morning,

I am new to the myFico world and come from Identity guard. My wife and I just relocated to a new city and this has allowed me to be in a better financial position. That being said I have a small surplus that can eliminate all of our cc debt in one hit. After looking at the forum there are several different opinions of debt and utilization ratios. My questions is if my wife and I's overall credit debt is 15k what percentage of the debt should be let ride on the cards to reap the best rewards via the score increase? How much should I charge on them monthly etc....?

I appreciate everyone's input and hope to see you guys at the top, 800 club here we come.

God Bless,

Welcome to the board Donplayer813. From what I have gathered from this site and others when it comes to using a your cards responsibly. If I am wrong on any of this please feel free to correct me anyone. Once you pay off the CC debt try and follow a budget when it comes to spending on your cards. Pay them off weekly or wait to near the statement date and PIF then. Though you will want to leave at least one card with $2.00 on it or $3.00 if you have a Discover card. This way one card will report usage and keep your utilization low and might give you a slight bump in your score depending on where you are in your credit history.

Anonymous · ‎03-25-2017

Welcome @Donplayer813

You can go ahead and pay off everything on your cards while leaving a balance of 9% on just one for maximum scoring.

As far as regular usage, there are many ways to do that and as long as you have all but one paid off and 1-9% reporting on the other then your scores will be their best. Use them for things you'd be paying for anyway (Netflix, insurance payment, gas, dining out...) and you won't have to worry about a thing.

Anonymous · ‎03-25-2017

Thank you all for your responses. My simulators say I will be in the 700's with paying the accounts off. Besides time and smart utilization is there anything else that I can do to speed up the process. While I do not plan on using my credit this year, I do plan on buying my second home early 2018.

HeavenOhio · ‎03-25-2017

Because percentages round up, I'll add that 9% would mean 8.99% or below. 9.00001% turns into 10%, 29.00001% turns into 30%, etc.

Anonymous · ‎03-25-2017

Do you have any installment loans (student loans count in here too)? Higher scores are seen when there is a mix of credit types.

HeavenOhio · ‎03-25-2017

@Anonymous wrote:
Thank you all for your responses. My simulators say I will be in the 700's with paying the accounts off. Besides time and smart utilization is there anything else that I can do to speed up the process. While I do not plan on using my credit this year, I do plan on buying my second home early 2018.

Where are you looking at your scores? You might be seeing VantageScores. Someone more knowledgeable than I can probably clarify this, but I don't think VantageScore cares if all cards show a zero balance. FICO has the caveat that it likes to see a small balance on one card (as long as that balance is due to a new charge, of course ).

Anonymous · ‎03-25-2017

@Anonymous wrote:
Thank you all for your responses. My simulators say I will be in the 700's with paying the accounts off. Besides time and smart utilization is there anything else that I can do to speed up the process. While I do not plan on using my credit this year, I do plan on buying my second home early 2018.

Great advice from everyone about paying off all of your CC debt now, for both you and your wife -- as well as the advice to always pay your monthly CC bill in full (PIF) moving forward. PIF will prevent you from ever paying interest and it will benefit you in other ways as well.

Note that the recommendation to keep All cards at Zero Except One (AZEO) with the remaining card reporting a small balance -- this is great advice, but it does not help as a long-term strategy for gradually building your score over time. Rather, it is a short-term strategy for getting extra scoring points in the 40 days before an important credit pull. Thus, many people don't worry about doing AZEO every month. Rather, they just use their cards naturally and always PIF. Then when they need to geta bunch of extra scoring points (before a mortgage pre-approval, say) they implement AZEO maybe 40 days before.

In terms of other strategies to help you this year....

INSTALLMENT LOANS

Can you confirm that you currently have an open mortgage on your reports? (I think you said that you do.) If so, then you are set as far as having at least one open installment loan. If you have no open installment loans, let us know. Also, be sure to consult with us here before you decide to pay off an installment loan -- this can hurt your score.

DEROGS

Do you have any derogatory or "negative" informations on your reports? This would be lates, charge-offs, collection, liens, public records, etc. If so, it may be possoble to get this removed. This should be your top priority this year, for you and your wife.

CREDIT CARDS

Can you confirm that you each have at least three credit cards on your reports, preferably in your name? (AU or Authorized User cards are ok and are not uncommon for married couples, but ideally you should each have some cards in your own name too.)

OPENING NEW ACCOUNTS

Assuming you have at least a few credit cards and an installment loan, you will benefit from opening no new accounts -- especially if you have several inquiries in the last year.

Anonymous · ‎03-25-2017

@HeavenOhio wrote:
Where are you looking at your scores?

GREAT question from HeavenOhio.

You will be wanting to pull your reports (these are different from your scores) once a month, and from all three bureaus There are loads of free tools out there to do this. It's very important to learn how to read and understand everything on your reports.

As far as monitoring your credit scores over the next year, there are many ways to do it. Some people (like me) choose a very low-cost approach to this. At the other end of the spectrum would be a high-power credit monitoring service like myFICO Premium. That would cost you and your wife $80/month or almost $1000 a year. Folks here can explain your options more if you like.

After you get your credit card balances reporting perfectly (I'd recomend doing AZEO for a month or two) you should then pull your FICO mortgage scores. Your mortgage scores will be different from other FICO scores and also different from non-FICO scores. Doing so costs money so I would (from my frugal cost-conscious perspective) recommend doing it sparingly -- unless you decide to spring for a high-end service like myFICO Premium.