I want to change my ways for the better too, pal! Diet, exercise, etc.-- the list doesn't end. :-)
One thing you have identified is that, although you are still carrying some CC debt (on which you pay interest), you have made a plan to pay it way down over the next three months. AWESOME. This is definitely changing your ways for the better. It's the best thing you can do right now, because you will get out of the trap of paying CC companies their ultra-high interest rates. It helps equally with scenario (1) or (2).
Since you are in a gardening phase (#2), my advice is the following:
- When a card's balance gets paid off, don't worry about keeping it at $0. Rather, set that card up on auto-pay so that it pays in full the balance reported in the monthly statement. (PIF).
- Use your cards naturally and let their positive balances appear on your reports. It's no problem long term, and in fact it's a good thing. Remember, if a card reports at $75 one month, you will also (by virtue of auto-pay) have paid that off before it became due.
- If, on a given month, every single card reports a positive balance, fine. If a few of them that month have a zero, fine.
- If it becomes evident to you that you use a certain card so rarely that, many months could conceivably go by with it reporting a zero, then make an intentional effort to use that card. One strategy is to put a small recurring charge on it, like a $7.99 Netflix, say. Or just work out a plan to make sure you use it to buy a cup of coffee every three months. (But be sure you wait long enough for that cup of coffee to generate a statement and report to the CRAs.) Whatever works. The reason (which you identified) is to ensure that it will never be cancelled for lack of use.
- Don't worry about utilization while you are gardening. Just make sure you PIF and keep each card from ever being maxed out. (Maybe under 70%?)
If you ever move back into phase #1 (you need every single fraction of a point possible), then:
- Make sure all CC's but one report at $0.
- The remaining positive balance should be < 9% of that card's credit limit.
I will add a purely anecdotal observation of my own. My own personal experience is that I get a better maximal result out of having an overall ultilization (which counts all credit limits) of less than 2% but more than 1%. For example, 1.1%. Thus I personally cannot recommend having a really tiny balance (like $5) as your sole positive balance, though other people seem to be fine with that.
Finally, you may develop a desire to increase your credit limits while you are gardening. If so, you will find some threads at myFICO devoted just to that. I think the recomended strategy in that case is to keep pushing the card close to the CL but still under that. Then a few days after the statement prints, pay off the amount owed. Then run it up again, etc. Again, I have never done this, but I think that's what people recomend if you are trying to induce the CC issuer to spontaneously give you a CLI. It seems like an OK strategy to me as long as you aren't under the impression that a higher CL will in itself improve your score, and as long as the strategy doesn't cause you to spend spend more money than you otherwise would.
