topic Re: carry balance on one or two cards? in Understanding FICO® Scoring

carry balance on one or two cards?

expatCanuck — Fri, 08 Jun 2018 12:12:08 GMT

I've got two 0% BT cards -- 2.7/14K on one (<20%), 5.5/15K (~37%) on the other.

I have a window to transfer the 2.7K to the latter card for no fee, which would give me an extra 4 months to pay off the debt (tho' I'm confident that I won't need that long).

Transferring the 2.7K would result in a utilization of ~55% for the latter card. In any event, cumulative util is under 7%, and my remaining 7 cards will be PIF'd and report $0.

Will there be any significant FICO hit if I effect the full transfer, and could I transfer at least most of the 2.7 (say, as long as I keep the target card util under x% (where x 50/48/?) -- in other words, what's the single card util threshold above which things can start to get nasty)?

Re: carry balance on one or two cards?

SouthJamaica — Fri, 08 Jun 2018 12:41:24 GMT

@expatCanuck wrote:
I've got two 0% BT cards -- 2.7/14K on one (<20%), 5.5/15K (~37%) on the other.

I have a window to transfer the 2.7K to the latter card for no fee, which would give me an extra 4 months to pay off the debt (tho' I'm confident that I won't need that long).

Transferring the 2.7K would result in a utilization of ~55% for the latter card. In any event, cumulative util is under 7%, and my remaining 7 cards will be PIF'd and report $0.

Will there be any significant FICO hit if I effect the full transfer, and could I transfer at least most of the 2.7 (say, as long as I keep the target card util under x% (where x 50/48/?) -- in other words, what's the single card util threshold above which things can start to get nasty)?

50% is a threshold so yes you will get spanked. I recently lost 7 points for that.

Re: carry balance on one or two cards?

expatCanuck — Fri, 08 Jun 2018 13:45:41 GMT

Thanks. Any idea how close can I cut it (i.e. - 49.9 / 49.5 / 49.4 / 49 / 48.9)?

Re: carry balance on one or two cards?

DollyLama — Fri, 08 Jun 2018 14:07:40 GMT

Less than 48.9%, to play it safe even 48 would keep it under without spooking creditors.

Re: carry balance on one or two cards?

SouthJamaica — Fri, 08 Jun 2018 15:56:30 GMT

@expatCanuck wrote:
Thanks. Any idea how close can I cut it (i.e. - 49.9 / 49.5 / 49.4 / 49 / 48.9)?

Me personally I feel that 48% is the only comfortable spot because of possible interest getting added on.

Re: carry balance on one or two cards?

expatCanuck — Fri, 08 Jun 2018 16:14:41 GMT

@SouthJamaica wrote:
@expatCanuck wrote:
Thanks. Any idea how close can I cut it (i.e. - 49.9 / 49.5 / 49.4 / 49 / 48.9)?
Me personally I feel that 48% is the only comfortable spot because of possible interest getting added on.

A valuable caveat -- tho' there shouldn't be any interest 'cause these cards have 0% 'til May & September '19, respectively (and, when I calculate my payoffs, I make sure it's paid off a month early (I'm learning)).

Re: carry balance on one or two cards?

HeavenOhio — Fri, 08 Jun 2018 17:04:40 GMT

@expatCanuck, 48.9% is the threshold. Go above that, and you're no longer under 50%. Since you're not paying interest, 48.9% is fine. If you were paying interest, you'd want to aim for 46–47% to keep the next month's interest charge from bumping you over the threshold.

Re: carry balance on one or two cards?

Anonymous — Fri, 08 Jun 2018 17:58:14 GMT

One thing that no one has mentioned is that the 8 point drop may have no practical effect if you think the card will be paid to < 48% in the next month (which you indicated would be the case). Utilization scoring impact is a point in time -- penalties vanish once the utilization changes.

By a practical effect I mean something like you planning to buy a house or car in the next 6 weeks, and the score drop hurting your chances for approval. If that is not going to happen, I can't see the 53% card mattering.

Re: carry balance on one or two cards?

expatCanuck — Fri, 08 Jun 2018 22:58:17 GMT

@Anonymous wrote:
One thing that no one has mentioned is that the 8 point drop may have no practical effect if you think the card will be paid to < 48% in the next month (which you indicated would be the case). Utilization scoring impact is a point in time -- penalties vanish once the utilization changes.

By a practical effect I mean something like you planning to buy a house or car in the next 6 weeks, and the score drop hurting your chances for approval. If that is not going to happen, I can't see the 53% card mattering.

Also a terrific observation. All the big-ticket items happened in 2016 (car) & 2017 (mortgage refi, HELoan).

The only practical effect that concerns me is spooking creditors. All but 3 of these cards are new (6 months or less). Given that I typically PIF 7 of the 9 before they report (or, at least, tend to have de minimus balances), I think I should be okay.

I'm not particularly concerned about BoA, as it has a 20-year history on me (and vice-versa) and seems delighted to give me more than enough rope to hang myself (one 30-day late 6+ years ago). But I'm new to Barclay, Chase and Discover, and certainly don't want to do anything that might cause them to CLD. Amex & I go back to '99; our history is rocky, but I've never stiffed them.

Re: carry balance on one or two cards?

Anonymous — Fri, 08 Jun 2018 19:00:21 GMT

I am fairly confident that never in the history of the CRAs has a CC issuer taken adverse action (such as a CLD) based on one card going over 49% when total utilization remained in the 1-8% range and one's FICO scores were in the mid 700s or higher.

Tweak those variables a bit and AA is conceivable. For example if the card went above 88%, or if the score drop cause a person to go below some scoring threshold for that issuer (e.g. under 680), or if the total utilization went from below 9% to 31%... etc. But given your particular situation, I'd estimate the chances of AA caused by the 53% card to 1 out of a million.

Re: carry balance on one or two cards?

HeavenOhio — Fri, 08 Jun 2018 20:38:29 GMT

Discover will happily take on your BT. They're not known for AA, even under pretty extreme circumstances. Barclays is wonky and hard to predict. But even with their card, I think your plans are fine.