Credit Cards Center Credit cards from our partners
Reply
New Member
Posts: 1
Registered: ‎01-11-2012
0

What is the best way to pay credit cards to increase FICO Score?

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
Valued Contributor
Posts: 1,671
Registered: ‎05-24-2007
0

Re: What is the best way to pay credit cards to increase FICO Score?

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.

Frequent Contributor
Posts: 315
Registered: ‎05-28-2011
0

Re: What is the best way to pay credit cards to increase FICO Score?

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).

TU Auto enhanced FICO (9/2012): 744
EX FICO (8/2012): 748
EX FICO (6/2010): 739
Established Member
Posts: 27
Registered: ‎12-14-2011
0

Re: What is the best way to pay credit cards to increase FICO Score?

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.


Starting Score: EQ 637 EX 625 TU 629
Current Score: EQ 637 EX 625 TU 629
Goal Score: 725


Take the FICO Fitness Challenge
Frequent Contributor
Posts: 277
Registered: ‎05-27-2009
0

Re: What is the best way to pay credit cards to increase FICO Score?

[ Edited ]

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!

 

 

Current Cards: Banana Republic Visa ($5,300), Chase Freedom ($2,000), Discover It ($11,500), Amex Costco True Earnings ($5,000), Chase Slate ($2,500)
Valued Contributor
Posts: 1,863
Registered: ‎09-20-2011
0

Re: What is the best way to pay credit cards to increase FICO Score?


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.

 

Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
† Credit cards for FICO Score ranges: The score ranges are guidelines based on actual applicant approvals and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.