topic Re: Utilization advice in Understanding FICO® Scoring

Utilization advice

Stevielynx — Mon, 04 Jan 2016 19:27:45 GMT

I have 4 cards.
Cap 0% interest until next month bal 1102.96 limit is 1500

Nfcu secured bal 706. 1k limit

New NFCU rewards with 0 bal 20k limit

New Chase Slate 4k limit 0% balance transfer

My goal is to raise my scores, lowest is 700 and highest is 722.

I was thinking I would transfer all but 9% of both the NFCU secured and the Cap1.

But that would make the Slate at close to 50%.

Advice?

Re: Utilization advice

Stevielynx — Mon, 04 Jan 2016 22:43:43 GMT

I'm hoping some of our experts could chime in. I have less than a week to make a move before my payment due date.

Re: Utilization advice

SouthJamaica — Mon, 04 Jan 2016 23:21:01 GMT

@Stevielynx wrote:
I have 4 cards.
Cap 0% interest until next month bal 1102.96 limit is 1500

Nfcu secured bal 706. 1k limit

New NFCU rewards with 0 bal 20k limit

New Chase Slate 4k limit 0% balance transfer

My goal is to raise my scores, lowest is 700 and highest is 722.

I was thinking I would transfer all but 9% of both the NFCU secured and the Cap1.

But that would make the Slate at close to 50%.

Advice?

IMHO you should keep it even in terms of percentage, and get everything under 50%

Then under 30%

Then under 10%

Re: Utilization advice

Stevielynx — Mon, 04 Jan 2016 23:58:52 GMT

Okay. How about spreading the balances like this to equal put utilization :

Transfer 89% of the balance to NFCU with 20k limit.

This leaves two cards at and under 9%.

(The NFCU cars also has a lower interest rate.)

Transfer 89% of the balance of the NFCU Secured card to Chase Slate. No bal transfer fee and 0% for 15 months.

3 out of 4 cards are now at or under 9%.

Chase slate will have a balance of 617. 9% would be $360, so I would be at about 20% utilization on that card.

Does this work the way it seems?

Re: Utilization advice

Stevielynx — Tue, 05 Jan 2016 00:01:36 GMT

My phone messed that up.

Okay. How about spreading the balances like this to equal out utilization :
Cap1 : transfer 89% of the balance to NFCU with 20k limit.

This leaves two cards at and under 9%.

(The NFCU cars also has a lower interest rate.)

Transfer 89% of the balance of the NFCU Secured card to Chase Slate. No bal transfer fee and 0% for 15 months.

3 out of 4 cards are now at or under 9%.

Chase slate will have a balance of 617. 9% would be $360, so I would be at about 20% utilization on that card.

Does this work the way it seems?

Re: Utilization advice

Anonymous — Tue, 05 Jan 2016 00:07:40 GMT

I don't know the details of your Slate agreement. I see it is 0% interest. Is there a balance transfer fee?

You mention that you have a desire to raise your scores. Is this more of (a) a general desire to see them improve? Or is this (b) a specific need for them to raise ___ amount in the next ___ months because of the specific upcoming credit need of _______? With (a) you often have more time and are just interested in how to do some good stuff for yourself for the long haul -- which is easier of course.

You indicate that two of your four cards are new (the NFCU and the Slate). How new are they? Are they old enough thay your current credit scores are already taking into account these new tradelines (including your new much larger total credit limit)?

Do you have a plan for paying all your current CC debt off? (Not just an intent but a step by step plan that you can see how to carry out.) Without such a plan, the mere act of moving the debt around won't help that much, though as SJ says you will experience some improvement by getting each card to below 50% utilization.

If you have...

(a) a debt payoff plan, and

(b) some time before the scores need to get higher, and

... my advice would be to make it simple. Just transfer all your CC debt over to the Slate. That will result in a utilization of 46% on the Slate card. That will not trigger any significant score loss (since you will be < 49%). Then execute your debt payoff plan and make sure that your balance is going down by at least $200 each month (and be sure to make additional payments for anything else you charge).

In a few months your debt will be < 39% on the Slate and so on.

This approach will get you 3 cards out of 4 with a $0 balance, which FICO will like -- and will get all your debt out of high interest cards and onto your 0% card. Your total utilization will already be below 9%. The reason to make sure you implement a plan for paying it off is that (a) the 0% rate doesn't last forever and more importantly (b) without a plan for getting out of debt you will be at risk for your debt level growing much higher now that you have a higher total credit limit.

Let me know if that makes sense. Just my thoughts.

Re: Utilization advice

Stevielynx — Tue, 05 Jan 2016 00:12:11 GMT

Makes perfect sense. The Chase is 0% no balance transfer fee. I plan to finance a car by mid summer or end of year.

My utilization is high but I run at least 2 x my credit limit through Cap1 and the secure NFCU. I make a half a dozen payments a month on these cards.

So, I'll do the balance transfer and put the cards in my lock box.

Re: Utilization advice

Anonymous — Tue, 05 Jan 2016 01:04:08 GMT

Sounds great. Just bear in mind that, on any card that you have shoeboxed, be sure to make at least one small purchase on it every 4-5 months. just as insurance against it being cancelled due to inactivity.

Congrats on adding two more cards. Four cards is enough to power a very high score. I only had three for a very long time and mine was in the mid 830s.

PS. Have you ever had an installment loan before?

Re: Utilization advice

Stevielynx — Tue, 05 Jan 2016 01:12:24 GMT

I had a Wells Fargo installment loan. It's still on my EQ (waiting on other 2 reports.)

Paid as agreed, zero balance closed 07/2006

Re: Utilization advice

Anonymous — Tue, 05 Jan 2016 01:22:43 GMT

That loan may drop off your reports before you buy your car. In which case you may want a credit profile that has an open installment loan on it -- a loan for which you have already paid some of it off. That could make your score look better to possible lenders. Let us know here if you want a pretty painless way to do that.

Re: Utilization advice

Stevielynx — Tue, 05 Jan 2016 01:27:59 GMT

Yes please.

Re: Utilization advice

Anonymous — Tue, 05 Jan 2016 01:49:43 GMT

The idea is to add what is called a Share Secure loan to your profile. You add the loan and then pay most of it off (but then keep it open for the full term of the loan). The result is a very cheap way to create an installment loan history on your credit profile.

It's been discussed many times here on this forum. Here is a very recent thread, which will also give you the name of a person (WestRiver) who is implementing this technique this very week.

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Should-I-get-an-installment-loan/td-p/4383085