topic Re: Credit Utilization?? in Understanding FICO® Scoring

Credit Utilization??

Anonymous — Mon, 09 Jan 2017 19:27:31 GMT

I feel like I still have this part confused but regarding credit utilization through much researching and reading i see that 1-9% of credit card usage is good but generally 30% or less.

I understand that part but what about having mulitiple cc cards???

My credit cards are

BOFA Travel Rewards

BOFA Cash Rewards

Chase United MielagePlus

Chase Saphire Preferred

Target Redcard (credit card)

I plan to honestly only use the Preferred and BOFA travel rewards depending on the subject.. and all the other cards I have just for the sake of having multiple accounts/credit limit total.

Does that mean i have to utilize every single card and post a 1% balance? or my plan was to just use the main cards and carry that small balance and pay it in full after it POSTS. If i go this way I'd still use the other cards every once in a while say once every 2 months or so for credit card activity..

Thanks

Re: Credit Utilization??

Anonymous — Mon, 09 Jan 2017 19:38:00 GMT

For optimal scoring, only one card should have a balance (<10%) with all other cards having a $0 balance. Use all of your cards however you like, just have all but one paid to $0 when their posting dates come around

Re: Credit Utilization??

redpat — Mon, 09 Jan 2017 20:53:56 GMT

@Anonymous wrote:
For optimal scoring, only one card should have a balance (<10%) with all other cards having a $0 balance. Use all of your cards however you like, just have all but one paid to $0 when their posting dates come around

This is not necessarily true, some have better scoring with multiple cards reporting. In fact I had one card reporting over 60% and had very little score change, a point or two. I paid that card the following month and my scores only went back up one or two points. Everyone's credit profile is different and it's not one size fits all.

If you are not looking for credit optimal scoring means nothing.

Use the cards you want and remember the most important thing about credit is paying on time and not getting over your head.

Re: Credit Utilization??

Anonymous — Thu, 12 Jan 2017 00:18:21 GMT

@redpat wrote:
@Anonymous wrote:
For optimal scoring, only one card should have a balance (<10%) with all other cards having a $0 balance. Use all of your cards however you like, just have all but one paid to $0 when their posting dates come around
This is not necessarily true, some have better scoring with multiple cards reporting. In fact I had one card reporting over 60% and had very little score change, a point or two. I paid that card the following month and my scores only went back up one or two points. Everyone's credit profile is different and it's not one size fits all.

If you are not looking for credit optimal scoring means nothing.

Use the cards you want and remember the most important thing about credit is paying on time and not getting over your head.

redpat, I don't believe what you stated to be true above.

"...some have better scoring with multiple cards reporting..."

I have never heard anyone state this. What I HAVE heard people state (myself being one of them) is that they have had EQUAL scoring with multiple cards reporting.

Basically, a penalty exists on many profiles based on the number of cards reporting but it doesn't exist on all profiles. On some profiles people can let up to all of their cards report balances (single-digit utilization balances) and not take a penalty for doing so where others will see a score decrease in doing this. To my knowledge, however, no one has ever stated that they actually saw a scoring benefit from allowing more than 1 card to report a small balance.

The bottom line is that allowing 1 card to report a small balance will maximize the scoring sector of FICO scoring.

Re: Credit Utilization??

Anonymous — Thu, 12 Jan 2017 12:36:05 GMT

@Anonymous wrote:
I feel like I still have this part confused but regarding credit utilization through much researching and reading i see that 1-9% of credit card usage is good but generally 30% or less.

I understand that part but what about having mulitiple cc cards???

My credit cards are

BOFA Travel Rewards
BOFA Cash Rewards
Chase United MielagePlus
Chase Saphire Preferred
Target Redcard (credit card)

I plan to honestly only use the Preferred and BOFA travel rewards depending on the subject.. and all the other cards I have just for the sake of having multiple accounts/credit limit total.

Does that mean i have to utilize every single card and post a 1% balance? or my plan was to just use the main cards and carry that small balance and pay it in full after it POSTS. If i go this way I'd still use the other cards every once in a while say once every 2 months or so for credit card activity..

Thanks

Hi Joseph! Welcome to the forums.

The advice you are getting is generally spot-on. Here's a few additional thoughts related to your questions about card use. To summarize your first post:

You have five credit cards. Only two of them you plan to ever use (if it is up to you). The other three you'd ideally like to never use -- you just want them there to give bulk to your profile and to give yourself a greater total credit limit.

Great plan for the most part. But you need to tweak it a bit. The three cards you plan to never use you will want to use occasionally (but it only needs to be a couple times a year).

First off, you should plan to use each card at least once in the 90 days after you first get it. When a card has never been used even once, it increases sharply the chance that it will be cancelled due to inactivity. For me, I just make it a rule to use it for something I needed anyway (groceries, gas, whatever) in the first week after I activiate it.

Second, the cards that you plan to almost never use you can stick in a shoebox somewhere. Just be sure that you take them out every six months and use them. Again, my advice is just take them with you one day when you are going to the grocery story. Buy an item of food with each one. Whatever works for you. Just like the first point, you are doing this to prevent them from being cancelled due to inactivity. Once every six months is fine -- no need for anything more often. (Your thought about every two months is overkill.)

A few more thoughts. You write:

My plan was to just use the main cards and carry that small balance and pay it in full after it POSTS.

A word about terminology. If you are paying the balance that appears on your statement in full, then you are not carrying a balance. To carry a balance means that you pay only a part of the Amount Owed on that statement. For example, suppose your statement says you owe $400. By the time the statement gets to you, your actual balance may be $500 (because you have made some more charges). If you pay the full $400 then you are paying in full (and not carrying). If, however, you pay only $100 (say), then the remining $300 will be carried over to your next statement and you will pay interest on that $300.

Great choice to always pay your cards in full!

Final thought: the advice to make sure that you have a small number of cards reporting a balance and to have the amounts that do report be small numbers -- this is fine to optimize your score. But you can get these extra points any time you like, by paying all cards to $0 except one (and to have the remaining card report $20 or so). You probably don't need those extra points every month, right? So just use your two big cards naturally, just like you planned, and pay them in full. If your utilization goes up to 40% or even 50% occasionally, who cares? Doesn't matter as long as you are not trying to use your score for something.

Re: Credit Utilization??

Anonymous — Sat, 14 Jan 2017 02:55:29 GMT

I have several cards will 0 balance with a fico of 737.. I just applied for 2 cards $3000 and $10000 and got approved.. I know my score will go down a bit.. But the reason why I applied for those cards bc they have a balance transfer.. I want to capitalize on the 0% interest for 12 months on my wifes credit card balances..

I have cards $2000, $2500, $8000, $4000, $2500, $1000 $2000 line of credit.. all with maximum $100 balance.. I am planning to use 80% of the new cards on balance transfers.. I know you want to keep it under 30% for each card but this will still be under 30% of my total available credit how much more will it impact it

If it is a huge impact I will just use 30% balance transfer on those 2 cards... I want to keep my score over 700 at all times

I appreciate thoughts in advance

Re: Credit Utilization??

Anonymous — Sat, 14 Jan 2017 03:20:27 GMT

Hello Hainess. Welcome to the forums!

So to summarize, you have two new 0% cards, with limits of $3000 and $10,000. You are thinking about doing a balance transfer (of your wife's CC debt) to these two new cards, bringing each of the two cards to an individual util of 80%, which will bring your total utilization to a bit under 30%.

Sound right?

The caveat is that it is important to you for your scores to never drop below 700 (and you have a 737 now).

May I ask why that is so important to you? For example, will you be buying a car or a house any time in the next six months? If not, what is the concern? The "damage" that gets done to your score by the high individual util will be totally temporary. It will gradually vanish as you pay those two cards down, which presumably you plan to do. In a few months I'd guess that you can bring them down to < 69%, which will give you some significant relief.

It's quite possible that your scores might stay above 700 anyway -- I am just trying to unlatch a possibly unnecessary requirement from your decision.

Re: Credit Utilization??

SouthJamaica — Sat, 14 Jan 2017 04:14:19 GMT

@Anonymous wrote:
I have several cards will 0 balance with a fico of 737.. I just applied for 2 cards $3000 and $10000 and got approved.. I know my score will go down a bit.. But the reason why I applied for those cards bc they have a balance transfer.. I want to capitalize on the 0% interest for 12 months on my wifes credit card balances..

I have cards $2000, $2500, $8000, $4000, $2500, $1000 $2000 line of credit.. all with maximum $100 balance.. I am planning to use 80% of the new cards on balance transfers.. I know you want to keep it under 30% for each card but this will still be under 30% of my total available credit how much more will it impact it

If it is a huge impact I will just use 30% balance transfer on those 2 cards... I want to keep my score over 700 at all times

I appreciate thoughts in advance

Don't let any card or other revolving account reach 30%

Re: Credit Utilization??

Anonymous — Wed, 18 Jan 2017 22:34:50 GMT

@Anonymous wrote:
Hello Hainess. Welcome to the forums!

So to summarize, you have two new 0% cards, with limits of $3000 and $10,000. You are thinking about doing a balance transfer (of your wife's CC debt) to these two new cards, bringing each of the two cards to an individual util of 80%, which will bring your total utilization to a bit under 30%.

Sound right?

The caveat is that it is important to you for your scores to never drop below 700 (and you have a 737 now).

May I ask why that is so important to you? For example, will you be buying a car or a house any time in the next six months? If not, what is the concern? The "damage" that gets done to your score by the high individual util will be totally temporary. It will gradually vanish as you pay those two cards down, which presumably you plan to do. In a few months I'd guess that you can bring them down to < 69%, which will give you some significant relief.

It's quite possible that your scores might stay above 700 anyway -- I am just trying to unlatch a possibly unnecessary requirement from your decision.

It would be nice for my score to be over 700 Not buying a car anytime soon but if I find a good deal on a house I may get a mortgage.. but I saw my score change no joke from 620 to 720 in 3 weeks last year when I paid 99% of my debt in the same week.. Transunion updates your credit balance withen a week after you receive your bill.. So I will probably utilize 80% my balance transfer and if I need to apply for credit I will just prepare a month in advance to get my score back up..

All the cards that I have I don't even touch half of them.. They just sit in my drawer.. leave the balance at 0. I use about 3 cards to collect points etc..

I will eventually drive for 800 score next year and keep it there