topic Re: Yet another utilization question... in Credit Cards

Yet another utilization question...

Anonymous — Fri, 29 Feb 2008 02:09:17 GMT

Regarding utilization...is it correct to say:
if util > 60% = bad ?
if util is between 30%-60% = less bad to OK
if util is between 10% - 29% = better
if util is around 10% = best
if util 9% = diminishing returns?

I ams trying to figure out my personal sweet spot for utilization, we probably cannot keep up 10%, but better around 20%-30%...just trying to find out for my plan...

Thanks all!

Re: Yet another utilization question...

Anonymous — Fri, 29 Feb 2008 02:53:13 GMT

Under 50% is mandatory

Under 30% better- (a 40 point differnce in my bucket between 23% and 43% utl-

80 point difference between 7% and 43%.

HinH wrote:
Regarding utilization...is it correct to say:
if util > 60% = bad ?
if util is between 30%-60% = less bad to OK
if util is between 10% - 29% = better
if util is around 10% = best
if util 9% = diminishing returns?

I ams trying to figure out my personal sweet spot for utilization, we probably cannot keep up 10%, but better around 20%-30%...just trying to find out for my plan...

Thanks all!

Re: Yet another utilization question...

Anonymous — Fri, 29 Feb 2008 03:47:49 GMT

Thank you sir!

I am here (BAL/HC):

Orchard Bank CC: $290 / $300 (usually pay 3/4's twice a month)

AA Juniper CC: $750/$800 (pay $200 or so every two weeks)

Home Depot (in store CC): $1400/$1500 (just bought 400sq/ft of tile and tile saw)

Dell Preferred: $1000/$1500

So I want to pay the Home Depot and Dell off or down to $200 balance, and then be able to use other two cards without getting dinged too hard.

Paid off = $1100 (if two CC's are maxed) / 4100 = 25%

$200 left = $1500 / 4100 = %36.6

I am at 620 (FICO/EQ) and need to be around 680 for the best refi terms (dropping PMI, etc...). So I am going to get my util straight and go after a couple of older baddies...

One question though...do they count individual utilization or overall or a combination of both?

anywho...thanks to all for helping me get this far...

Re: Yet another utilization question...

Anonymous — Fri, 29 Feb 2008 03:50:39 GMT

HinH wrote:

One question though...do they count individual utilization or overall or a combination of both?

Great question. Both, and they count about equally.

Also keep in mind you'll get a little boost by letting fewer than half of your acounts report a balance at the same time.

Message Edited by cheddar on 02-28-2008 07:50 PM

Re: Yet another utilization question...

Anonymous — Fri, 29 Feb 2008 03:55:55 GMT

OK, Thanks Cheddar... I need to write down/remember statement dates and pay down before they release my statement...interesting game...lol.

Re: Yet another utilization question...

Anonymous — Fri, 29 Feb 2008 04:00:37 GMT

HinH wrote:
OK, Thanks Cheddar... I need to write down/remember statement dates and pay down before they release my statement...interesting game...lol.

Yes, it is an interesting (and fun?) game for the first few months. Then it gets to be a real PITA really fast.

This is why most here advise only playing this game when you need a score boost because you will be applying for something in the next few months. Otherwise this game is usually more hassle than it's worth.

Sounds like you have the right idea, though. Just don't forget that even though you'll be making a payment before the statement date, you'll still need to make a payment after the statement date and before the due date, as well. Wouldn't want you to be marked with a late because you were paying more attention to the FICO-reporting payment at the expense of the actual payment due.

Message Edited by cheddar on 02-28-2008 08:00 PM

Re: Yet another utilization question...

Anonymous — Fri, 29 Feb 2008 04:25:41 GMT

"Then it gets to be a real PITA really fast."

This is very true- this why some get thier CL's up high enough that they have great UTL all the time-

Most of my CC's only give 20 to 25 days grace- I want to use it.

I have not paid any interest on anything but my mortgage in 6 months-

cheddar wrote:

HinH wrote:
OK, Thanks Cheddar... I need to write down/remember statement dates and pay down before they release my statement...interesting game...lol.

Yes, it is an interesting (and fun?) game for the first few months. Then it gets to be a real PITA really fast.

This is why most here advise only playing this game when you need a score boost because you will be applying for something in the next few months. Otherwise this game is usually more hassle than it's worth.

Sounds like you have the right idea, though. Just don't forget that even though you'll be making a payment before the statement date, you'll still need to make a payment after the statement date and before the due date, as well. Wouldn't want you to be marked with a late because you were paying more attention to the FICO-reporting payment at the expense of the actual payment due.

Message Edited by cheddar on 02-28-2008 08:00 PM

Re: Yet another utilization question...

rom828 — Wed, 05 Mar 2008 16:43:32 GMT

Interesting, Cheddar.....didn't know about the 0 balances actually helping...thought you had to have something showing, though I still prefer 0!!

How much of a boost are we talking if fewer than half have no balances?!

I really need to concentrate on my 2 credit cards that are currently 70-80% so that's really going to be my focus, but....

if I can get a little increase paying off the little store/calatogue cards, all the better!

My scenario:

Newport News $0/670 CL

Metrostyle 40/500 (using 90 day deferred billing, pay no interest)

Old Navy 60/200 (opened 11-07, took 2 point hit, took another 5 when $80 reported 02-08)

Chadwicks 270/880 (using 90 day deferred billing)

Brylane 0/250

Orchard MC 1000/1390

Orchard Visa 900/1150

I took a 2 point hit when new (10-08) mortgage reported (finally) last month, so with the Old Navy minuses, my score went from 629 to 620EQ. Since I'm right onthe edge with that 620, every little bit would help!!

I know I have to get the Orchards down and that's my plan...figure it will take me about 3 months to get to the 50% mark and 6-9 to pay off.

Will it help much if I go ahead and pay off Old Navy, Metro and about 1/3 Chadwicks this month, which is what I was planning to do as I don't like to have balances on store cards anyway, or would I it be better to throw more at Orchard (we'd be talking about $170 over and above the $150 per Orchard card I will be making).

And I'm also still a little confused with utilization as far as whether it's on average or per card..I know you say it's some of both, so I don't know the best route to go. When I'm working on these Orchard cards, will it be better to concentrate on one and pay it off first, or pay them both down equally? Do I need to have them below 50% to see any score increase?!

As always, I appreciate your ...both your replies to me personally and all your good posts!!

Message Edited by rom828 on 03-05-2008 08:43 AM

Re: Yet another utilization question...

rom828 — Wed, 05 Mar 2008 16:54:09 GMT

Now I'll be the PITA and hound you (and anybody else that wants to join in!!) for advices in response to my previous post. Guess this is a 'bump' (?!?!)

Actually, I am trying to get whatever boost I can as we hope to do mtg refi (to get some cash out from euqity for needed repairs.upgrades) so every little bit will help.

That's why I'm anxious for help as far as what will give me the most 'bang for my buck' when making these cc pyts..

As advised in another post when I was inquiring about citi /discover cc in hopes of increasing util (which you and Sylvia both said wait so I will!!)......

I have a collection that supposed to come off in April which I hope gives me a few points, my mortgage will be 6 mos old in april (wont that help?!!--took a 2 point hit when it finally reported last month), and I want to pay these revolving accts in the way that should help my score the most the quickest.

Any advices will really be appreciated!!

Re: Yet another utilization question...

Anonymous — Wed, 05 Mar 2008 18:42:26 GMT

Well, here's what I've gathered from my obsessive reading of these boards:

- under 50% util is essential.

- 1 - 9% util is best.

- fewer than half of CCs should have balances, and balances should be 1 - 9%.

So, it would seem to me that if you paid off those lower balance cards this month, then you'd have fewer than half of your CCs showing a balance. Caveat: I don't know how much of an increase you'd see from that, given your high util overall. Then I'd focus on getting the remaining balances under 50%, and then again under 9%.

I'm fairly new to this, compared to others on the boards, but this is the strategy I'm taking. So far I've seen about a 20 point bump in EQ, working on my util (I've gone from approx 55% util to 25% util overall). YMMV, as I believe they say.

Re: Yet another utilization question...

Anonymous — Wed, 05 Mar 2008 20:05:17 GMT

So this is what you've got...

Newport News $0/670 = 0%

Metrostyle $40/500 = 8%

Old Navy $60/200 = 3%

Chadwicks $270/880 = 31%

Brylane $0/250 = 0%

Orchard MC $1000/1390 = 72%

Orchard Visa $900/1150 = 78%
==========================================
Overall Util = $2270/5040 = 45%

So you see what is going on, now you have to plan what course of action to get your util to a certain level, then attack the others. I would target the higher util cards and work one down and then the other, that way you will be getting the wins (as far as score increases) and less of a "two steps forward one step back" routine.
I have read that you would benefit from have a 1-9% balance on half of your revolving accounts and PIF the other half.

I am in the same boat (short term large jump for better refi) and hope to have somewhere of a 10-25pt increase per account, and yes YMMV...good luck!

Re: Yet another utilization question...

rom828 — Wed, 05 Mar 2008 20:48:57 GMT

Well, I guess it is certainly safe to say I need to get and keep half PIF and the others below 10%!!

The simulator shows that if I pay even just $600 over 3 mos period I'd get pretty good boost.....but seeing these outlined (thanks, HinH!!) and showing 45% overall utilization, I guess I'm getting hit pretty hard on a per card utilization also.

I think I will plan on paying off the smaller ones this month (on 15th) and see what happens, and then plan to really buckle down on the Orchard cards and get them to 1-9% ASAP.

I'll be reporting back to let y'all (yes, I'm a southerner!!) know about any score changes as a result of this payment plan!!

Re: Yet another utilization question...

coco08 — Wed, 05 Mar 2008 21:01:56 GMT

How do you calculate utilization? I'm always confused by that.

Re: Yet another utilization question...

rom828 — Wed, 05 Mar 2008 21:38:38 GMT

I may not be the best one to answer, but I'll give it a shot:

Basically, utilization is computed by dividing the amount(s) owed by the credit limit(s),

ie: $500 owed on a $1000 CL = 50% utilization. For multiple cards, you add all amounts owed and divide by total of CLs. (See the explanation/outline HinH provided above on my accounts....very helpful!!)

What I was confused about is the scoring of utilization, whether it's on a total amount or per card. From what I've read, and these replies, it's both, and is probably contingent on other factors as well, which is why "YMMV"......it could be a little different from person to person. But bottom line is that you want utilization really low: 1-9% (ie: $300 owed on $5k CL)

I'm going to try PIF on over half of my accounts and see what happens to score, and then will be paying way down on remaining cards with high utilization, and again, see what happens. I hope what happens is that I see a big increase!!LOL . As mentioned, Simulator shows a 30-50 point increase just by my paying $600 over 3 months, so I will definitely be making better utilization a priority!!

Re: Yet another utilization question...

Anonymous — Wed, 05 Mar 2008 21:42:33 GMT

coco08 wrote:
How do you calculate utilization? I'm always confused by that.

Divide the balance by the available credit. Example: $250 balance on a credit card with a $500 limit is 50% (250/500 = .5, or 50%).

To figure out overall util, add up all your balances and all your available credit. Divide the total balances by the total available credit, and that's the overall util. Example:

Card Balance Available Credit

Amex $100 $1000

Visa $5 $6000

MC $375 $500

Total 480 7500

480/7500 = .064, or 6% util overall.

Re: Yet another utilization question...

Anonymous — Wed, 05 Mar 2008 21:44:46 GMT

Great minds, Rom

Yes, both do matter. I have an overall util of about 26%, which is not great but not horrible either. But considering that 3 of my accounts are at 78%, 62%, and 63% util respectively, I'm sure that's having a significant impact to my score that I'm hoping will ease up once they get below (at least) 50%.

Re: Yet another utilization question...

rom828 — Wed, 05 Mar 2008 21:55:09 GMT

Thanks, Des.....I try...though I know I'm far from the most qualified!!

I'll really be anxious to see how my plan works out......guess that'll be the test as to whether overall or individual utilization counts more, less or the same.

I'll also be glad when I feel I can focus on the joy of being debt free (except my mortgage!!) and not have to be so focused on the whole scoring game!!

Re: Yet another utilization question...

coco08 — Thu, 06 Mar 2008 03:08:38 GMT

Thanks to Rom and Desifink for your help. I'm anxious to crunch the numbers and see where I stand.