topic Re: BT Question in Credit Cards

BT Question

jsmith12345 — Fri, 07 Sep 2007 19:57:13 GMT

Hi guys,

I need a little help with a scenario. I have one CC with a 0 balance and a $20k limit and another CC with $15k charged on it and a $25k limit. Am I better off leaving it like it is, or transferring $3k or so from the one to bring it below 50% utilization. I'm only concerned on whether making this transfer would help my Fico score, not the benefit of interest on the transfer. I'm currently paying the same on either.

Thanks for the help.

Re: BT Question

Anonymous — Fri, 07 Sep 2007 22:00:06 GMT

jsmith12345 wrote:
Hi guys,

I need a little help with a scenario. I have one CC with a 0 balance and a $20k limit and another CC with $15k charged on it and a $25k limit. Am I better off leaving it like it is, or transferring $3k or so from the one to bring it below 50% utilization. I'm only concerned on whether making this transfer would help my Fico score, not the benefit of interest on the transfer. I'm currently paying the same on either.

Thanks for the help.

I have been corrected on this before, but from what I understand from FICO, the util is based on total and not on individual cards. Moving the debt around will not help your score, but paying it down will. The following is a direct quote from MYFICO.com:

"Keep this in mind: This credit usage ratio is one of the most important factors to your FICO score, so you should work on paying down your balances. Your FICO score looks at the ratio of revolving debt, but not in which accounts the debt resides. Therefore, consolidating or moving your debt from one account to another will usually not help your FICO score since the same total amount is owed."

But if you get a creditor who looks at each account individually the old fashioned way, they may take a different view. That I can't be sure of...

Re: BT Question

SpecFile — Fri, 07 Sep 2007 22:06:00 GMT

Great explanation Sleigh. I to have heard that they can look at your individual accounts and high util. on one card can in fact hurt you.

Re: BT Question

jsmith12345 — Fri, 07 Sep 2007 22:30:00 GMT

Thanks for the response. I keep reading conflicting info on that as well. I may just try it to let everyone know if it did anything.

Re: BT Question

SpecFile — Fri, 07 Sep 2007 22:32:42 GMT

Please do let us know!

Re: BT Question

Anonymous — Fri, 07 Sep 2007 22:48:24 GMT

sleigh17 wrote:

from what I understand from FICO, the util is based on total and not on individual cards.

FICO score looks at both overall AND individual util. One maxed out CC has a negative effect, but not near as much as all one's CCs maxed out.

Re: BT Question

Anonymous — Fri, 07 Sep 2007 22:53:21 GMT

jsmith12345 wrote:

I have one CC with a 0 balance and a $20k limit and another CC with $15k charged on it and a $25k limit.

If those are your only CCs, then you've got 33% overal util, but 60% util on one CC.

BT $6700 from one to the other and "load balance".

Are either of these AMEX CCs?

Do you have any other CCs or is it just these 2?

Re: BT Question

jsmith12345 — Sat, 08 Sep 2007 03:42:16 GMT

No, not my only cards. Neither one is Amex. Both are Citi, so since I can't BT one Citi to another I'll have to do it another way.... So, individual utilization does indeed make a difference? Does the # of cards that have a balance on them effect it as well? I have 3 cards with relatively small balances that I could easily transfer to a single card. None of those 3 are close to 50% util... Thanks again for the help.

Re: BT Question

Anonymous — Sat, 08 Sep 2007 06:57:34 GMT

jsmith12345 wrote:
No, not my only cards. Neither one is Amex. Both are Citi, so since I can't BT one Citi to another I'll have to do it another way.... So, individual utilization does indeed make a difference? Does the # of cards that have a balance on them effect it as well? I have 3 cards with relatively small balances that I could easily transfer to a single card. None of those 3 are close to 50% util... Thanks again for the help.

Too many cards with a balance can ding you, but util is a much bigger deal. Getting util as low as possible is more important, and I doubt 3 cards with a balance will register as "too many".

Re: BT Question

jsmith12345 — Sat, 08 Sep 2007 16:25:47 GMT

What would be considered too many balances? I had a recent drop in my score with a charge on my Best Buy card (0% interest on a flat screen) and 2 small charges on 2 other cards I seldom use. It really hurt my score which was surprising to me (-27 points)...All total I have balances on 8 cards, with 2 I've already paid off. I have no baddies anywhere on my credit and have a long history. So, by next month it'll be 6 cards with balances. Will that help my score back up? I have >50% utilization on 2 cards. I have overall utilization around 30%.

Re: BT Question

jsmith12345 — Sat, 08 Sep 2007 16:26:37 GMT

Oh, and thanks for the help!

Re: BT Question

SpecFile — Sat, 08 Sep 2007 16:33:08 GMT

With no baddies and util. decreasing, yes you will see an increase in score. I'll bet you can't wait to see your scores next month. Good luck.

Re: BT Question

Anonymous — Sat, 08 Sep 2007 23:50:38 GMT

jsmith12345 wrote:
What would be considered too many balances?

Good question. Direct answer is I don't know a number. However, I've heard the numbers 8-10 or more mentioned. But again I'd be more focused on the util.

jsmith12345 wrote:
I had a recent drop in my score with a charge on my Best Buy card (0% interest on a flat screen)

What's the util on the Best Buy card?

jsmith12345 wrote:
All total I have balances on 8 cards, with 2 I've already paid off. I have no baddies anywhere on my credit and have a long history. So, by next month it'll be 6 cards with balances. Will that help my score back up? I have >50% utilization on 2 cards. I have overall utilization around 30%.

Are the 8 CCs all you have?

Any near term plans to buy or refi a house or car? Any near term plans to get more CCs, particularly are you planning to go after any 0% APR BT offer CCs?

If no-no-no, then I would say don't worry about short term FICO score decreases. Focus on debt elimination. For example, just pay the minimum payment on the 0% APR debt on Best Buy. On your bank CCs, I'd look at the cost of BTing to the lowest APR CC. Debt that don't accrue interest is the cheapest kind of debt.