Weight - TL or Balance paydown decrease?

[NumberCrazy]

It may have been asked, but I am tired of looking to find it.  I have a refund coming from taxes and wish to know which is my bigger bang for a buck.  I have a bit of a complex question, but I will try to simplify it.  I have a partial payment agreement on a credit card with the balance decreasing by more than I agreed(I pay more). So with that account when I pay it off it will show no balance, closed account, and no available credit.  My TL is 9 of 17 utilization and a 48% revolving debt ratio.  IF I pay this account, it will be paid off, my utilization of TL will be then 8 of 16.  I do not think I am getting any available credit from this account so it will not affect my ratio of credit utilized from what I can see.  BUT I wonder which will help me more.

1.Paying other credit cards that the utilization on each card is about 80%, total utilization of all accounts still 48%. Paying will take them to: one being <10% utilization, and the second being 38%, and the third (partial payment card) 6k of 15K has not changed, but the 380.00 I pay each month.

2 or paying the partial payment credit card down to 0.  and that changes my TL to 8 utilized of 16 open, and my cash flow is much better.

Which has the better weighted score change.  Paying down each cards balance, or decreasing the TL utilized? I cannot simulate anything.  I am trying to get above 700 and have not moved from 684 for 2 months.  Thanks!

Message Edited by NumberCrazy on 03-23-2009 11:58 AM

[marty56]

There are 3 factors that make up util - total util, util on each card, and # cards reporting a balance.  The best result is obtained from have a single card reporting a balance of 9% or less of its CL.

I think you are asking whether it is better to reduce the # of cards reporting a balance or the % util on each card and if so I would say the answer is complex based on what you are trying to acomplish and what you are trying to protect.  These days you have to watch for AA as well as your balances.

If you are trying to get out of CC debt, the answer is easy - use the Debt Snowball approach and PIF in trurn each CC starting with the one with the smallest balance and so on.

The problem is you may be vulnerable to AA one or more of your accounts that have high util and depending on which CCs you have, you may have to pay down the ones that are at most risk. 

A reasobale approach would be then to reduce the ones that are over 50% util and then put more to the ones that are at most risk for AA.

Please provide more information on what you are trying to do and why.

[NumberCrazy]

The prime objective is to raise the score the most with the amount I have to pay down. 

Yes I have learned the ideal is one card and <9%, but what I am asking is where the greatest impact of where to pay the money.  I only have 3 cards with utilization as I explained and of those three one is an arranged payment for less than owed each month for 5 years and two others with 80% utilization.  I have 6 others that i utilize , but carry no balance. 

I am asking if total utilization of TL will be better to achieve with this paydown(payoff of arranged credit card), or Scenario 2 the other two having <9%, the other <50% with the paydown. I cannot pay down to one only having <9% with this payment at this point.

Question 2: With this arranged payment for less than full payment arrangement account. Will this even change status to help me if it is payed off.  It shows pays as agreed and I am not sure it will change the negative status anyway when it is payed off since it will remain
in bad history.  I am not sure if it affects me now, but I am sure it has a current effect too.

Thanks

Message Edited by NumberCrazy on 03-24-2009 04:13 AM

[haulingthescoreup]

I'm pretty sure it's going to hurt you in the future if it says something like "paid as agreed for less than full amount." I don't suppose paying the full amount is an option? I know these things tend to be loaded up with fees and interest and all.

Failing that, I'd leave that one going as is. Think of it sort of as a loan, and just keep faithfully making the payments. (I'd have three months' worth of payments set aside in savings, to make sure that you won't jeopardize your payment plan if you hit a rough spot.) Of the two remaining cards, IMO your best bet would be to PIF the one with the smaller balance and get the other down as far as you can. Strike that; you have six other cards reporting $0, good for you, so you probably aren't being hit with the "too many cards with balances" thing, at least not too much. So get them both to <9% with the goal of continued reduction and keep going on schedule with the other, with it being <50%.

[NumberCrazy]

Thanks!

That seems to be the ideal way, but it still didn't really answer my core question.  Is there more weight on a total tradeline utilization of 8/16 (below 50%) with all mortgages installments, and credit cards, or is it better to have the 9/17 (9 used /17 total) tradelines with the <9% on one and <50% on the second and third essentially.  

It may not be an easy enough answer since I finally found out someone else made a comment they weigh about the same essentially to boost your score. 

the credit card is a strange one since I am not sure it will be marked as settlement not paid in full.  It was payment arrangements showing 180.00 a month, but I pay them 380.00 a month on a reduced interest rate until paid off.  So you think it will be shown as paid in full, but settled for less.

Does anyone have a simulator, and do they work?  I saw an ad for simulators that show your best route.  I also saw something like it in myfico, but it is only available 30days after the report is issued and I am saving my 3 credit reports April or May.

[NumberCrazy]

I think I figured out the ideal.  If I pay down the one card  to get my total TL below 50% AND <9%, and pay down the others, I have them lower than 50%. I only have the issue of large cash flow going out on the partial payment card.  So I accomplish both and do not need to decide which helps more.  Errr well I cannot payoff AND below 9% so I will have to just pay it off and work on reducing the other down to <9% over time.

Thanks

Message Edited by NumberCrazy on 03-24-2009 01:41 PM

Message Edited by NumberCrazy on 03-24-2009 01:44 PM

[haulingthescoreup]

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NumberCrazy wrote:

Thanks!

That seems to be the ideal way, but it still didn't really answer my core question.  Is there more weight on a total tradeline utilization of 8/16 (below 50%) with all mortgages installments, and credit cards, or is it better to have the 9/17 (9 used /17 total) tradelines with the <9% on one and <50% on the second and third essentially.  

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I hope I'm reading this right this time: don't combine your installment (and mortgage) util with your revolving util. They are calculated completely separately. The only util you need to be looking at now is revolving, i.e., credit cards. A related factor is number of accounts with balances. Shoot for half or fewer of all open tradelines: 17/2=8.5 --> 8 should report a balance, AND shoot for fewer than half of all open CC's with balances. Was it 9 total cards? If so, 9/2=4.5, so 4 max should report a balance. 

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It may not be an easy enough answer since I finally found out someone else made a comment they weigh about the same essentially to boost your score.  

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If someone said that revolving and installment util count equally, they're wrong. If someone said that overall util and individual util count equally, we think that they're sorta right.

Many of us have found that we can get away with one card with high util, as long as overall remains quite low. Add a second high-util card, and blammo.

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the credit card is a strange one since I am not sure it will be marked as settlement not paid in full.  It was payment arrangements showing 180.00 a month, but I pay them 380.00 a month on a reduced interest rate until paid off.  So you think it will be shown as paid in full, but settled for less.

Does anyone have a simulator, and do they work?  I saw an ad for simulators that show your best route.  I also saw something like it in myfico, but it is only available 30days after the report is issued and I am saving my 3 credit reports April or May.

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Try the FICO score estimator: FICO Score Estimator

When it asks for number of inqs or something, remember to just use the number from whichever report you're using. So if you're doing EQ, and you have 3 inqs on EQ, 2 on TU, and 4 on EX, enter 3.

It gives a pretty wide range, and it varies for different members, but it's a start. It also let's you play "what if" by running an estimate with and without a derog, which can inspire you to get those GW letters going.

[NumberCrazy]

Great I learned a bit more on that one.  I did not realize there were two total utilities one for Mortgage and installments and another for revolving, but I knew the weight was greater for revolving cards.  I thought it was only a total utility of all lines and ratios on each card and had that wrong. So I have the less than 50% utility on TL of revolving correct and just have to get my utilization to a reasonable level.  Iwas not sure how the partial payetn credit card is calculated though and that worries me that it could show up as 100% since credit is no longer available.

"If someone said that overall util and individual utility count equally, we think that they're sorta right."

That was what I was making as the speculation.

"Try the FICO score estimator: FICO Score Estimator"

That will do the trick to estimate.

"Many of us have found that we can get away with one card with high util, as long as overall remains quite low. Add a second high-util card, and blammo."  

That is important to know when I get close to higher scores.

Thanks again.