Understanding FICO® Scoring

[tpmcCalifornia]

Question regarding how to pay down credit cards.

I'm building a house and the builder ran out of money.

Because it is a construction loan, there is significant $$ in equity but I cannot tap into it until the project is completed with an occupancy permit in hand.

I have been paying him out of pocket to get the project finished.

As such, I charged many credit cards up to the 90% - 95% level.

My score dropped from 755 down to 675 = 80 points in 6 months due to this activity over time.

I now have some cash and want to pay the cards down. Should I pay off a select few, or pay them all down to a lower loan to available credit ratio?   (Ex.  In lieu of 90% of available credit, down to 70%).  Further, what are the trigger points? I know if you are below 50% of LTV, it is a score adjuster at the 49% mark. What are the other trigger points? 79% or 69%?  Hoping this makes sense and would greatly appreciate any input.

[pennypine]

90% 72% 50% 34% 25% 9%
Bad ----------> Good


Rough estimates!

[Timothy]

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tpmcCalifornia wrote:

Question regarding how to pay down credit cards.

I'm building a house and the builder ran out of money.

Because it is a construction loan, there is significant $$ in equity but I cannot tap into it until the project is completed with an occupancy permit in hand.

I have been paying him out of pocket to get the project finished.

As such, I charged many credit cards up to the 90% - 95% level.

My score dropped from 755 down to 675 = 80 points in 6 months due to this activity over time.

I now have some cash and want to pay the cards down. Should I pay off a select few, or pay them all down to a lower loan to available credit ratio? (Ex. In lieu of 90% of available credit, down to 70%). Further, what are the trigger points? I know if you are below 50% of LTV, it is a score adjuster at the 49% mark. What are the other trigger points? 79% or 69%? Hoping this makes sense and would greatly appreciate any input.

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Put in all into an Excel worksheet and create a plan.

Paying highest APR= save $

The break points in UTL are at 50% 30% and less than 10%
Remember that Fico takes both total UTL and Individual UTL into the score.

[m_jonis]

IF you believe the FICO score simulator, your score will actually rise about 20-30 points MORE if you pay them down slowly over the course of 6 months, vs. paying them down all at once. At least that's what it does for me (when I run the score simulator, put in what happens if I pay X of my revolving debt. vs what happens if I pay X amount/month for X months.)

[fused]

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m_jonis wrote:
IF you believe the FICO score simulator, your score will actually rise about 20-30 points MORE if you pay them down slowly over the course of 6 months, vs. paying them down all at once. At least that's what it does for me (when I run the score simulator, put in what happens if I pay X of my revolving debt. vs what happens if I pay X amount/month for X months.)

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The score simulator is highly inaccurate. It's far better to pay down the balances quickly.

[MidnightVoice]

The reason the score simulator "prefers" paying over 6 months is that it also adds in 6 months ageing and assumes perfect payment during this tim,e.

Paying off at once and waiting 6 months will be better 

[fused]

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MidnightVoice wrote:

The reason the score simulator "prefers" paying over 6 months is that it also adds in 6 months ageing and assumes perfect payment during this tim,e.

Paying off at once and waiting 6 months will be better 

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Agreed!