Assuming you have other loans and/or CC on your reports, you will probably get best score by only having ONE CC report a balance. Keep that one under 80% util at all costs. Since even the big one is below that, you should be OK. Of course, lowering total utilization will help.
If you are looking just to boost the score by few points than any payment strategy would work in your favor.
YMMV But if you are looking at getting out of debt along with significant score boost than getting the util below 9% would be an ideal option. Also this may help you in securing best possible rates (also depending on other factors on you credit report as the time of mortgate application).
Paying down the balances will working in favor of your FICO however you do it. When it comes to mortgage qualification they are going to look at what your total monthly expenses to determine what you can afford. So if you can get two of those cards paid off then you'll lower your monthly expenses (as you'll only have one minimum credit card payment instead of three) and should qualify for a slightly larger loan.
From what I've read around here, you'll get a boost if you only have a reported balance on 1 of your open cards, and if that reported balance is less than 9% of your total available credit. Just decreasing your utilization overall though will givce you some help. Good luck!
GBanks wrote:I am going to apply for a home loan in the next couple months. I have three credit cards with the following balances and limits:
CC1 - 623/1800 (Cap 1)
CC2 - 587/800 (BoA)
CC3 - 4700/6600 (Citi)
My question is whether its better to 1.) get CC1 and CC2 at below 30% utilization and leave CC3 at 57% (resulting a a total under 50%), 2.) get the total under 50%, leaving all 3 over 30% or, 3.) get CC1 to $0 CC2 to $0 and leave CC3 at 72% . I am not in a position to pay them all off at this time but would like to do whichever option is more beneficial for my credit score at this time. I'm not looking for the best long term approach, just what will increae my credit score the most in the next couple months to get me the lowest interest rate on my home loan.10/26/11 - EQ - 645, EX - 681, TU - 630
I highly suggest paying off the cards before getting the mortgage, it's one less thing to worry about. It may take you a little longer but will be worth it in the end. Once you get the house you are going to have a lot of unexpected expenses. Starting with a clean slate will be a huge benefit.
But to answer the question I would get all balanced under 50% first. Then start focusing on paying the balances off completely. starting with the lowest and going up. You do get a pick up but getting under 30%. I'm not sure if we have the score down to a science enough to determine if your score would be higher with all cards under 30% or by having one less reporting a balance. You also have to consider the underwriter, I'm betting he would rather see one fewer cards with balances than UT under 30% with balances on every card. I'm going to go out on a limb and guess you don't have 20% down with those balances and your scores aren't likely to get to the point of easily qualifying for conventional by just paying the cards down. Your doing to be looking at FHA/VA/USDA. With those programs your scores are pretty darn close as is. By paying them off you wil easily qualify score wise.
Long story short, my suggestion is to snowball them and get to $0.