topic Drop Utilization = Get the card you want! in Credit Cards

Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 07:51:42 GMT

I recently did this, and it worked wonders!!! I had about 60% utilization on my cards, I decided to get a personal loan (close to same % I am already paying) and get the cards all down to $0. After this I waited 2 months, had my score jump up by 30 points, BAM now i got 2 cards that I wanted. I just am not charging anything untill the loan is paid off... I hope this helps someone that is on the edge of "pulling the trigger" but needs some extra points!

Re: Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 10:37:20 GMT

you got a personal loan to pay off the cc?

Re: Drop Utilization = Get the card you want!

Repo-ed — Tue, 19 Jun 2012 10:41:18 GMT

@Anonymous wrote:
you got a personal loan to pay off the cc?

So long as she puts noting else back on those cards, until after she PIFs the loan, her plan of action does make sense.

Re: Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 10:44:13 GMT

Does it? In that case, I could take a loan out at lets say 10 percent, to consolidate 2 credit cards at variable rates, how is that any different than doing a balance transfer?

Re: Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 11:06:54 GMT

jetsfan, it shows up as an installment loan; not a revolving account with UTI. My score went up after everything reported (even the loan). I went from a 652 to my now 685, just staying away from my cards untill the loan is paid off. It worked for me, maybe do some google search on the subject; I just know from my exp from just a couple months ago (This helped me land my Visa Signature from NFCU).

Re: Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 11:09:25 GMT

Also the "blanace transfer" if you can limbo it correctly (have one report before the other) You could actually for a few days have the lowerd Utilization. Just matters when they report. Card a (2k) reports on the 5th (you transfer on the 2nd) to card b ($0 - 2k now). Card B doesn't report the new balance untill say the 20th, you now have 2k less UTI on your report. Hope this helps!

Re: Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 11:18:20 GMT

thanks for the info. where did you go for the loan?

Re: Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 11:40:45 GMT

@Anonymous wrote:
I recently did this, and it worked wonders!!! I had about 60% utilization on my cards, I decided to get a personal loan (close to same % I am already paying) and get the cards all down to $0. After this I waited 2 months, had my score jump up by 30 points, BAM now i got 2 cards that I wanted. I just am not charging anything untill the loan is paid off... I hope this helps someone that is on the edge of "pulling the trigger" but needs some extra points!

Congrats! Do you think you can qualify for the Chase Slate 0% APR for 15 months with no transfer fee to pay off the personal loan?

Re: Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 12:42:27 GMT

Why not just pay off the debt, before seeking more credit?

Re: Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 12:51:35 GMT

@Anonymous wrote:
Why not just pay off the debt, before seeking more credit?

I agree, slightly.

In this case, the loan the OP took out makes financial sense. It'll come out to "savings" from less interest paid for the original CC's. Let's just hope the earlier trend of building up 60% utilization doesn't rear its ugly head again.

BTW, there should be a disclaimer to the OP's message stating that dropping utilization doesn't ALWAYS equal getting the card you want. You could have a 1% utilization, but if you have 15 negatives, you probably aren't getting the card you want. So in any case, it's a YMMV situation.

Re: Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 13:04:24 GMT

If the interest rate is the same on the loan, then whats the point other than seeking new credit? That is what led my brother into bk, he ran that new credit along with the old up and filed bk losing it all, including his home. Credit is great if used right, use it wrong and it will be a nightmare. Don't even try this with Penfed.

Re: Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 13:08:47 GMT

@Anonymous wrote:
If the interest rate is the same on the loan, then whats the point other than seeking new credit?

I really, REALLY hope that wasn't the case and hope it is a case where the loan is 10% and the CC's were at 24%.

Re: Drop Utilization = Get the card you want!

Revelate — Tue, 19 Jun 2012 13:29:36 GMT

@Anonymous wrote:
@Anonymous wrote:
If the interest rate is the same on the loan, then whats the point other than seeking new credit?
I really, REALLY hope that wasn't the case and hope it is a case where the loan is 10% and the CC's were at 24%.

That wasn't the case for the OP's post: installment loan close to the percentage on the credit cards, which I read as ~20%.

While I think this is a decent strategy in general, I was sort of scratching my head on that one. It doesn't make much financial sense to do so if it doesn't help you pay it back faster so unless there's a lower interest rate it doesn't amount to anything beyond a silly FICO trick. Also somewhat playing devils advocate on this, NFCU routinely approves mid-600's for 5K or better anyway seemingly, and there's a non-zero chance that increased aggregate CL would've lowered the utilization by enough to get a nice boost too.

I'd look into what someone else suggested, see if the installment loan (or at least a portion) can be transferred to a 0% APR BT offer... then it's not only a silly FICO trick, but also a smart move financially too. Usually consolidation loans that I've seen are for a smaller interest rate than the credit card debt, but that of course varies by lender.

+1 to Armywife's words of caution too. While a credit report and score need to be used to be of any value, simply using it to float more debt at your current APR's, which regardless of your income, makes it more challenging to pay back, needs to be managed carefully.

Re: Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 13:29:49 GMT

I just saw that message.

Gives me a sad face now. I get the utilization trick. But I don't get the financial decision to it. But that's a part of my personality, I value the financial decision over the FICO decision every time.

Re: Drop Utilization = Get the card you want!

RockinRay — Tue, 19 Jun 2012 14:43:39 GMT

@Anonymous wrote:
I just saw that message.
Gives me a sad face now. I get the utilization trick. But I don't get the financial decision to it. But that's a part of my personality, I value the financial decision over the FICO decision every time.

+1 -

Re: Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 21:54:45 GMT

DonGonzalo - I am actually looking at getting the chase slate Jan 2013, really want to break 700 before app'ing for it.
Armywifey85 - I have no plans to use the additonal credit, this worked for 2 reasons (1) To give me some breathing room
for when I go to sell my house and buy a new home next year (2) To force myself into a monthly payment (not just minimum!)
on the blanace for what I owed.
FrugalRican - The 60% uti was really about 4grand in debt (I clear 50k a year). I just never could seem to get it down though,
so me paying the loan gets it paid off at a certian time. Also will keep overall UTI under 10%

---My end goal was not just to get the increased score, but to also pay my debt down to $0. I am using my debit card for everything currently, also the loan was actually about 1% lower then my c.c. and it is a fixed payment versus the "Minimum". Yes I know you can pay more then the "Minimum" and that is something that I will be working on. So after the loan is paid off, I am back to $0 debt; for me this was a great ideal...but if your going to run up the cards and still have the loan = BAD BAD

Re: Drop Utilization = Get the card you want!

Anonymous — Tue, 19 Jun 2012 23:43:19 GMT

I hope it all works out for you

Re: Drop Utilization = Get the card you want!

tntexans72 — Wed, 20 Jun 2012 00:46:25 GMT

@Anonymous wrote:
I recently did this, and it worked wonders!!! I had about 60% utilization on my cards, I decided to get a personal loan (close to same % I am already paying) and get the cards all down to $0. After this I waited 2 months, had my score jump up by 30 points, BAM now i got 2 cards that I wanted. I just am not charging anything untill the loan is paid off... I hope this helps someone that is on the edge of "pulling the trigger" but needs some extra points!

I am new to personal loan but isn't it harder to get a personal loan than it is to get a CC?

If that is the case (loophole)...everybody would be doing this.

Just trying to understand your situation.

Re: Drop Utilization = Get the card you want!

yellowcake — Wed, 20 Jun 2012 01:15:51 GMT

OP, would you mind sharing where you got the personal loan?

Re: Drop Utilization = Get the card you want!

LS2982 — Wed, 20 Jun 2012 01:39:50 GMT

@Anonymous wrote:
I just saw that message.
Gives me a sad face now. I get the utilization trick. But I don't get the financial decision to it. But that's a part of my personality, I value the financial decision over the FICO decision every time.

I agree!!!