topic Re: CC util is killing me...arghhh in Credit Cards

CC util is killing me...arghhh

economan — Thu, 10 Sep 2009 06:38:25 GMT

Hi Gang,

I have a double whammy mortgage and credit card question. But don't worry, I'll focus on credit card util.

Currently, my overall cc ut is around 20%. My only cc is at 6000/12000. My problem is that I am 5 points shy of 700 on my mid score (EQX). If I can raise this score above 700 it will save me $2500 in loan fees. However, I am not sure if I should spend the $2500 on paying down the cc. If the score jumps to 700 or more, then I win in the sense that I spent the money paying off my own debt instead of loan fees. However, if the score doesn't jump to 700 or more, then I am out the $2500 I might need for closing costs.

I ran the FICO simulator and it says that if I pay down to 29% (in one month) my range will be 695-735 (argh). Does anyone have any experience with where the actual score ends up in the simulator's range??? Also, I ran the simulator for paying down to 39% and the result was 695-71.

All gueeses, thoughts, ideas are very appreciated.

Re: CC util is killing me...arghhh

Anonymous — Thu, 10 Sep 2009 07:16:53 GMT

@economan wrote:
Hi Gang,
I have a double whammy mortgage and credit card question. But don't worry, I'll focus on credit card util.

Currently, my overall cc ut is around 20%. My only cc is at 6000/12000. My problem is that I am 5 points shy of 700 on my mid score (EQX). If I can raise this score above 700 it will save me $2500 in loan fees. However, I am not sure if I should spend the $2500 on paying down the cc. If the score jumps to 700 or more, then I win in the sense that I spent the money paying off my own debt instead of loan fees. However, if the score doesn't jump to 700 or more, then I am out the $2500 I might need for closing costs.

I ran the FICO simulator and it says that if I pay down to 29% (in one month) my range will be 695-735 (argh). Does anyone have any experience with where the actual score ends up in the simulator's range??? Also, I ran the simulator for paying down to 39% and the result was 695-71.

All gueeses, thoughts, ideas are very appreciated.

How can this be true?

Re: CC util is killing me...arghhh

economan — Thu, 10 Sep 2009 07:39:17 GMT

ha! oh sorry, i meant to say my only cc with a balance.

Re: CC util is killing me...arghhh

Anonymous — Thu, 10 Sep 2009 13:39:47 GMT

Sometimes it helps to post your follow on question in the same thread as the original to avoid having to duplicating information:

http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&thread.id=132441

Yes, paying down your UTIL is the easiest, fastest, most directly controllable thing you can do to improve your FICO scores. Have you tried it yet?

Re: CC util is killing me...arghhh

Scamp — Thu, 10 Sep 2009 13:55:44 GMT

creditwherecreditisdue wrote:
Sometimes it helps to post your follow on question in the same thread as the original to avoid having to duplicating information:

http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&thread.id=132441

Yes, paying down your UTIL is the easiest, fastest, most directly controllable thing you can do to improve your FICO scores. Have you tried it yet?

When the original was posted that long ago, doing a new thread is fine.

Economan, there's no guarantee, of course, that getting your individual util down to 29% (or 28% to be safe, since util gets rounded up) will give you the points you need, but I think the chances are excellent that it would. If you're able to risk a bit more money on paydown, your chances of getting the necessary points would be even better.

Give this thread some time, see if haulingthescoreup or one of our other scoring-whiz mods is able to post their thoughts on this, before you make any decisions.

Re: CC util is killing me...arghhh

Anonymous — Thu, 10 Sep 2009 14:21:09 GMT

@economan wrote:
Hi Gang,
I have a double whammy mortgage and credit card question. But don't worry, I'll focus on credit card util.

Currently, my overall cc ut is around 20%. My only cc is at 6000/12000. My problem is that I am 5 points shy of 700 on my mid score (EQX). If I can raise this score above 700 it will save me $2500 in loan fees. However, I am not sure if I should spend the $2500 on paying down the cc. If the score jumps to 700 or more, then I win in the sense that I spent the money paying off my own debt instead of loan fees. However, if the score doesn't jump to 700 or more, then I am out the $2500 I might need for closing costs.

I ran the FICO simulator and it says that if I pay down to 29% (in one month) my range will be 695-735 (argh). Does anyone have any experience with where the actual score ends up in the simulator's range??? Also, I ran the simulator for paying down to 39% and the result was 695-71.

All gueeses, thoughts, ideas are very appreciated.

I don't exactly agree with your thesis.

Whether your score jumps or not, you still paid down your debt, so you are not "out" that money.

However, if that $2500 is a make it or break it amount of liquid cash for closing, then IMO you are too tight to do a mortgage (again, just MO). A good rule of thumb is that after closing, have 1 to 2 months of mortgage payments in cash left over. A better rule of thumb is to have your emergency fund of 3 to 6 months saved prior to going into a mortgage (not including closing and down).

When you are sqeezing into a mortgage by the skin of your teeth, there is no room or margin for error, hiccup or change in circumstance (medical, job issue, unexpected expense, emergency, etc).

If you are bound and determined to close, and you can't if the score fails to jump, then you really can't pay the CC down. Cause the underwriter will object to you borrowing it back for down or closing. That's why I said it may be a bit premature to do the home...it's gonna cost you $2500 uneccessary closing fee, and maybe a blip on the rate which costs over the mortgage term.

Re: CC util is killing me...arghhh

tiger67 — Thu, 10 Sep 2009 14:31:03 GMT

I agree with Scamp. There is a good probability that reducing the individual util to 28% would provide the required score bump. This would reduce your overall util to around 11% (if you lower to less than 9% would be even better). I experienced bumps below 19% and below 9% in overall util. I have also seen smaller bumps when individual fell below 39% and 29%, but your mileage may vary.

It's also possible to lower overall utility by getting a CLI on your other cards. Since you are in refi mode, only attempt this with companies that do soft pulls.

Re: CC util is killing me...arghhh

tiger67 — Thu, 10 Sep 2009 14:35:52 GMT

txjohn also makes some very good points. For some unknown reason, I assumed this was a refi.

Re: CC util is killing me...arghhh

Anonymous — Thu, 10 Sep 2009 15:37:08 GMT

@tiger67 wrote:
txjohn also makes some very good points. For some unknown reason, I assumed this was a refi.

The other thread mentions a $400K mortgage.

Re: CC util is killing me...arghhh

economan — Sun, 05 Dec 2010 17:49:22 GMT

BTW - Just wanted to say thanks to all for the help. The pay down got the score bump i needed. Been happy in home for a yr. Cheers.

Re: CC util is killing me...arghhh

Anonymous — Sun, 05 Dec 2010 18:20:28 GMT

@economan wrote:
BTW - Just wanted to say thanks to all for the help. The pay down got the score bump i needed. Been happy in home for a yr. Cheers.

Good to hear that it worked out for you . Congrats!

Re: CC util is killing me...arghhh

haulingthescoreup — Sun, 05 Dec 2010 18:20:35 GMT

@economan wrote:
BTW - Just wanted to say thanks to all for the help. The pay down got the score bump i needed. Been happy in home for a yr. Cheers.

Congratulations!

OK, now, c'mon, spill. What'd you drop the util to, and where'd your scores move to?

Re: CC util is killing me...arghhh

Anonymous — Sun, 05 Dec 2010 20:49:55 GMT

It's a dirty little secret.....