topic Re: Best option for utilization in Credit Cards

Best option for utilization

mark293 — Tue, 28 May 2013 16:45:45 GMT

In a nutshell:

What is the best method for decreasing utilization on my Chase Rewards? I am paying around $450 per month to knock it down as quick as possible

Chase Visa 9100/ 10,000 CL; 9.9 APR

Barclays 0/ 4500; 0% BT option for ??, then 9.9%

USAA 0/ 6000 22% APR; APR is too high, so BT is not an option

Discover It 0/ 3500; BT option 0% for 16 mo.

Bank of America 0/ 10,000; BT option 0% for 16 mo.

I would appreciate any help in obtaining information to make my utilization optimal for increased scoring. Currently I am at 728. AAoA- 6 years. Barclays, USAA, Discover It and BoA are all new accounts.

Re: Best option for utilization

tcbofade — Tue, 28 May 2013 19:12:23 GMT

What an interesting question. Here's my .02 and why.

Transfer $4,500 to B of A. (45% util on that card.)

Transfer $2,500 to Discover (71% on that card.)

Transfer $2100 to Barclays (47% on that card.)

Your overall utilization won't change at all, of course, but if you do that, you'll have two cards reporting at zero utilization (USAA and Chase Visa) and NO cards maxed out. (both of which REALLY affect your scores...ask me how I know... )

Then, pay $100 per month to B of A and Barclays (each) and send $250 to Discover until you get it's utilization under 50 %.

Then you re do your math based on how long which zero interest deal lasts. Good luck!

Re: Best option for utilization

blk8 — Tue, 28 May 2013 20:09:36 GMT

My .02 and a clever way to approach this.

1. Transfer entire Chase balance to your 0& BofA.

2. Check your reports for when Chase and BofA report to the bureaus.

3. You should time the balance transfer to show Chase with a zero balance and BofA with a zero balance (meaning BofA has not updated yet)

4. Apply for 2 cards or so to keep your UTIL down ... hoping for a 10k limit to match the other cards.

5. Pay away at your 0% interest :-)

Re: Best option for utilization

mark293 — Tue, 28 May 2013 20:49:50 GMT

Thank you blk8 and fade. That is the kind of outside of the box thinking I was looking for. The latter is particularly interesting, but unfortunatley the new TLs have come at the expense of inquiries. Additionally, I am a noob, so figuring out when cc's report would be challenging. I also do not know what my APR will be for BoA after the introductory 0% period. I could get screwed if it is high.

Re: Best option for utilization

mark293 — Tue, 28 May 2013 20:47:54 GMT

tcbofade

Is it not better to have 4 TL's reporting with 0 balance and one biggie balance? Just asking?

Re: Best option for utilization

ztnjpv — Tue, 28 May 2013 21:12:12 GMT

Well played BLK8!

Hopefully, the OP's balance reporting intervals can make that happen easily.

Re: Best option for utilization

ztnjpv — Tue, 28 May 2013 21:21:17 GMT

OP,

My two cents to add onto what blk8 said and your response to it.

It's not hard to figure out your reporting date. It's usually the date that your monthly cycle closes.....with very few exceptions (and I know Chase isn't one of them....I doubt BoA is either but I can't say for sure.)

The real trickiness is when the CRs update. In my experience, EX is almost immediate while EQ lags a day or so later and TU a day or so later still.

So, to be safe, you need access to all three bureaus with daily updates. That's easy as a paid service with freecreditreport.com (EX) and equifax.com. TU's only free way, Credit Karma, no longer has unlimited daily updating. Whenever you update, you have to wait a week for another update. But believe me when I say that EX is usually first to update. I have seen it many times. If you get a subscription to freecreditreport.com, you can check daily the day after your monthly cycle closes and figure 2-3 days and it will be updated on the others as well.

Hopefully, your BoA and Chase statement dates are far enough apart to allow some wiggle room in between. Check them out and let us know. If they are too close together, you'll need to call one of them and move the monthly cycle closing date ahead to accomodate enough room to work with.

You CAN do it.

Re: Best option for utilization

boomhower — Tue, 28 May 2013 21:32:44 GMT

Do you want to save the most money and pay it off the quickest of have the highest score while your paying down at the cost of paying more in interest?

Re: Best option for utilization

mark293 — Tue, 28 May 2013 22:16:15 GMT

High scores trumps a quick pay off. You "get it".

Re: Best option for utilization

LS2982 — Tue, 28 May 2013 23:40:08 GMT

@tcbofade wrote:
What an interesting question. Here's my .02 and why.

Transfer $4,500 to B of A. (45% util on that card.)
Transfer $2,500 to Discover (71% on that card.)
Transfer $2100 to Barclays (47% on that card.)

Your overall utilization won't change at all, of course, but if you do that, you'll have two cards reporting at zero utilization (USAA and Chase Visa) and NO cards maxed out. (both of which REALLY affect your scores...ask me how I know... )

Then, pay $100 per month to B of A and Barclays (each) and send $250 to Discover until you get it's utilization under 50 %.

Then you re do your math based on how long which zero interest deal lasts. Good luck!

I like this approach!!!

Re: Best option for utilization

Walt_K — Wed, 29 May 2013 02:13:47 GMT

@mark293 wrote:
Thank you blk8 and fade. That is the kind of outside of the box thinking I was looking for. The latter is particularly interesting, but unfortunatley the new TLs have come at the expense of inquiries. Additionally, I am a noob, so figuring out when cc's report would be challenging. I also do not know what my APR will be for BoA after the introductory 0% period. I could get screwed if it is high.

If you don't want new accounts, you could talk blk8's approach but rather than applying for new accounts, ask for some CLIs on your existing accounts. Chase always HPs though. I'm not sure about the others, I never keep that straight. In any event, inquiries without the addition of a new account (which will lower your AAoA) aren't going to hurt your score that much. Most of the effect of the inquiry on your score would be gone in 6 months, and all of it gone in a year.

Why are you interested in keeping your score maximized? Are you planning for another application while you are paying down the BT? If not, just transfer it all to BofA and be done with it. Your score will keep going up as your utilization is paid down.

As for getting stuck with the high APR after the BT period ends, that's going to be the case with any of your cards. But at 16 months of $450, you're going to have paid most of it back. Hopefully sometime in the next 16 months you can make a few extra payments, and if not, you can decide whether another BT is worthwhile.

Re: Best option for utilization

tcbofade — Wed, 29 May 2013 14:51:52 GMT

@mark293 wrote:
tcbofade
Is it not better to have 4 TL's reporting with 0 balance and one biggie balance? Just asking?

NO!

You want TWO reporting zero. That's one critical part of FICO scoring.

Define "biggie". I realize (and agree) that 71% on card looks scary, but ONLY to you and I. The CC issuer AND FICO scoring define "biggie" as over 89.9%.

Keep every card under 90% and keep two paid in full. (zero balance).

Re: Best option for utilization

tcbofade — Wed, 29 May 2013 14:53:56 GMT

@mark293 wrote:
Thank you blk8 and fade. That is the kind of outside of the box thinking I was looking for. The latter is particularly interesting, but unfortunatley the new TLs have come at the expense of inquiries. Additionally, I am a noob, so figuring out when cc's report would be challenging. I also do not know what my APR will be for BoA after the introductory 0% period. I could get screwed if it is high.

Not really. You mentioned that it's 16 month zero percent. If it jumps up to some scary unreasonable rate after 16 months, THEN you open a new zero percent card with another bank and transfer it again...

Re: Best option for utilization

mark293 — Wed, 29 May 2013 15:16:50 GMT

This has been a very enlightening thread. I plan to but half of the $9100 chase balance on my new BoA, thus keeping less than 50% uti on both cards instead of over 90% on one. I also got the itch last night and got the Hilton Honors for 7k CL. I am done for now. Off to tend for a while. Thank you all for your valuable insight.

Re: Best option for utilization

Anonymous — Wed, 29 May 2013 15:32:10 GMT

@tcbofade wrote:

NO!

You want TWO reporting zero. That's one critical part of FICO scoring.
Define "biggie". I realize (and agree) that 71% on card looks scary, but ONLY to you and I. The CC issuer AND FICO scoring define "biggie" as over 89.9%.
Keep every card under 90% and keep two paid in full. (zero balance).

Lots of good advice in this thread. Just a quick quesiton...

Are you asking the OP to keep 2 cards at zero because he has 5 CCs or is 2 cards at zero balance usually the magic number regardless of how many cards you have? Also, does 89% util on a card hurt your score? I thought anything over 50% util hurt your score.

Re: Best option for utilization

Walt_K — Wed, 29 May 2013 18:07:10 GMT

@mark293 wrote:
This has been a very enlightening thread. I plan to but half of the $9100 chase balance on my new BoA, thus keeping less than 50% uti on both cards instead of over 90% on one. I also got the itch last night and got the Hilton Honors for 7k CL. I am done for now. Off to tend for a while. Thank you all for your valuable insight.

I dont' understand why you are leaving a balance on the Chase card which you are paying interest on. Your FICO score doesn't remember what your past utilization was. You won't get more points for prior good behavior. It just scores what is on your report at the time it is pulled. Within about 8 months, even if you transfer all of the balance to BofA, you'll be back down to around 50% utilization. But you'll have paid less interest. Why is it important to maximize your score during those 8 months? You've said you already applied for another CC and don't intend to apply for any more soon. Plus, even if you did intend to apply for other CCs, your scores are fine. The only way I could see this mattering is if you were looking for a car or a mortgage in the next 8 months and your score was right near a cutoff for a better interest rate. If that's the case, I wouldn't have applied for that Hhonors card, but what's done is done.

Re: Best option for utilization

mark293 — Wed, 29 May 2013 18:24:42 GMT

^^^^^^^

I think I finally get it now. I can now see the advantages of transferring the entire amount. I wish I could see an amoritization of two $9100 amounts. One w/ 0% and the other with 9.9. I guess I got caught up in chasing the almighty score even though I have all the cards I want (except 1/ CSP). Sometimes you just need a good kick in the arse.

BTW, no future mortgage or auto loan needed. I just recently learned to love a healthy credit number. I think I need to step away from the forum for a while.

Apping for CSP in 5/2014

Re: Best option for utilization

Walt_K — Wed, 29 May 2013 18:41:45 GMT

@mark293 wrote:
^^^^^^^
I think I finally get it now. I can now see the advantages of transferring the entire amount. I wish I could see an amoritization of two $9100 amounts. One w/ 0% and the other with 9.9. I guess I got caught up in chasing the almighty score even though I have all the cards I want (except 1/ CSP). Sometimes you just need a good kick in the arse.

BTW, no future mortgage or auto loan needed. I just recently learned to love a healthy credit number. I think I need to step away from the forum for a while.

Apping for CSP in 5/2014

Yeah, it is easy to get caught up in the number without thinking about what the credit score is for. You'll be fine. Honestly, when you factor in the 3% transfer fee that you would save, leaving half of the balance on the Chase card probably isn't going to make that much difference in interest. But it will make some difference, and once this is paid down, there will be no difference in your score between the two alternative pathways. Since you can save some money with no difference in your credit score, so I would take the option that saves some money. Additionally, transferring everything to BofA has the added benefit of not having to worry about multiple payments. You can just focus on paying everything toward one card to try to wipe out that balance during the 16 month 0% period.

Re: Best option for utilization

mark293 — Wed, 29 May 2013 18:52:29 GMT

Walt, while I have your attention, why does my utilization get penalized for using all of my 36k kitchen heloc? I understand I used 100% of the funds, but why should my credit number have to suffer? I guess I was too ignorant to ask for more than I needed.

Re: Best option for utilization

Walt_K — Wed, 29 May 2013 19:29:39 GMT

@mark293 wrote:
Walt, while I have your attention, why does my utilization get penalized for using all of my 36k kitchen heloc? I understand I used 100% of the funds, but why should my credit number have to suffer? I guess I was too ignorant to ask for more than I needed.

HELOCs are normally excluded from utilization. Some people with high credit limits also have their cards exlcuded. You variously see this reported as taking effect around the $40K+ limit.

How do you know your HELOC is being counted? I suppose it is possible that it is counting because it is only $36K. I don't know if the process that excludes HELOCs operates only by the limit of the account, or if it specifically looks to identify accounts that are HELOCs apart from also excluding high limit accounts. But I'm curious how you know it is counting in your utilization. Are you seeing utilization reported as a specific percentage on a report from myfico, or are you just seeing a comment at the end of a report that says your utilization is too high. If it's the latter, you can't read too much into those comments.