topic Re: How far should I pay credit cards down? in Understanding FICO® Scoring

How far should I pay credit cards down?

Anonymous — Mon, 28 Oct 2019 17:21:27 GMT

Hello,
I have a general question. I currently have 1400 in credit card debt. The breakdown is below.
Chase Amazon $0 balance $500 credit limit
Kay jewelers $0 balance $2000 credit limit
Discover $1422 balance $1800 credit limit.
What should I do to maximize my credit score. I have the ability to pay the last one off without taking out a loan or something like that. Should I do that. When I ran the credit simulator it said if I pay that off completely it will increase my credit scores by 20 points. Any advice on what I should do? Thank you in advance.
Also, I have a small personal loan of $1200 and student loads of $6500. I want to buy a house in a couple month and need to raise my credit score by 10 points. Thank you again!

Re: How far should I pay credit cards down?

Remedios — Mon, 28 Oct 2019 17:26:40 GMT

Drop it below 9%. If getting a mortgage, let a small amount like $10.00 report right before the application

There should be some points gained as that card is pretty close to being maxed out. How many come back really depends on the rest of your profile, negatives in particular (if any are present)

Re: How far should I pay credit cards down?

Anonymous — Mon, 28 Oct 2019 17:27:31 GMT

I do have a missed payment on mine

Re: How far should I pay credit cards down?

Remedios — Mon, 28 Oct 2019 17:48:13 GMT

I'm sure (as one can be) if you pay down that card, you will get those 10 points.

Just let a small amount like $10.00 report on one card only. Older scoring models are neurotic when it comes to balances and number of cards reporting balances

I lose more than 15 points if more than one card reports even with minuscule amounts, and crossing 9% is additional 10-15 points

For comparison, there were no changes on Fico 8

Re: How far should I pay credit cards down?

SouthJamaica — Mon, 28 Oct 2019 18:10:07 GMT

@Anonymous wrote:
Hello,
I have a general question. I currently have 1400 in credit card debt. The breakdown is below.
Chase Amazon $0 balance $500 credit limit
Kay jewelers $0 balance $2000 credit limit
Discover $1422 balance $1800 credit limit.
What should I do to maximize my credit score. I have the ability to pay the last one off without taking out a loan or something like that. Should I do that. When I ran the credit simulator it said if I pay that off completely it will increase my credit scores by 20 points. Any advice on what I should do? Thank you in advance.
Also, I have a small personal loan of $1200 and student loads of $6500. I want to buy a house in a couple month and need to raise my credit score by 10 points. Thank you again!

Make sure to pay Chase and Kay off before any statement cut so they will report zero balances, and let Discover report a balance less than $100 before you pay it off. That will optimize your revolving utilization for the mortgage scores.

As to the loans, I would need to know the original loan amounts to tell you if there's any likelihood of anything you can do with those to improve your mortgage scores.

Re: How far should I pay credit cards down?

SouthJamaica — Mon, 28 Oct 2019 18:11:36 GMT

@Anonymous wrote:
I do have a missed payment on mine

Send verification letters to the bureaus about it. Sometimes that will cause it to be dropped from the reports.

Re: How far should I pay credit cards down?

Remedios — Mon, 28 Oct 2019 18:17:01 GMT

Or if verified, it will drop their score specifically

I would not do any disputes prior to mortgage unless you have plenty of time for scores to recover should dispute not go in your favor

While this may work with old debt currently assigned to collection, it almost never works with late payments on cards and loans.

Reason for that is if debt is sold multiple times, paper train (or electronic) can get lost too, or was not provided to them when they bought the debt, hence being unable to properly validate it.

Original lenders have this info, and not only that, but frequently will find other delinquencies that slipped through the cracks first time.

Do not dispute legitimate info on your CR, it has potential to hurt a lot.

Re: How far should I pay credit cards down?

Anonymous — Mon, 28 Oct 2019 18:29:56 GMT

Original loan amount is $1800. Also what do you mean “before the statement cuts”

Re: How far should I pay credit cards down?

Remedios — Mon, 28 Oct 2019 18:42:45 GMT

It means to pay down your balance before statement is ready, thus controlling how little is reported vs. just letting whatever you used report

Re: How far should I pay credit cards down?

Anonymous — Mon, 28 Oct 2019 19:21:49 GMT

So will my mortgage score move more than my fico scores when I pay this down?

fico 8 score and mortgage

Anonymous — Tue, 29 Oct 2019 16:14:25 GMT

Does your fico 8 score and fico mortgage move roughly the same when paying down credit card debt? I’m paying off 1350 of a $1428 balance on a $1800 credit limit card. I also have two other cards that are paid off in full. Chase amazon and Kay jewelers. The one with balance is discover.

Re: fico 8 score and mortgage

HeavenOhio — Tue, 29 Oct 2019 23:18:33 GMT

The "mortgage" scores are also versions of FICO. They're actually the "classic" FICO scores that preceded FICO 8.

From what I can tell, when compared to FICO 8, these older classic scores (aka "mortgage scores) are more sensitive to just about everything except for the lack of an open installment loan.

As mentioned, a single card with a balance of $10 or so will optimize your score. Your balance of $78 or so is pretty likely to give you the same score as the $10 balance. But if you want to be sure, pay the card down to $10.

Re: How far should I pay credit cards down?

SouthJamaica — Wed, 30 Oct 2019 01:11:09 GMT

@Anonymous wrote:
Original loan amount is $1800. Also what do you mean “before the statement cuts”

1. What about the student loans?

2. Statement date.

Re: How far should I pay credit cards down?

SouthJamaica — Wed, 30 Oct 2019 01:12:10 GMT

@Anonymous wrote:
So will my mortgage score move more than my fico scores when I pay this down?

Mortgage scores are more sensitive to number of accounts reporting a balance. They like to see all but one of the accounts reporting a zero balance.

Re: fico 8 score and mortgage

SouthJamaica — Wed, 30 Oct 2019 01:13:44 GMT

@Anonymous wrote:
Does your fico 8 score and fico mortgage move roughly the same when paying down credit card debt? I’m paying off 1350 of a $1428 balance on a $1800 credit limit card. I also have two other cards that are paid off in full. Chase amazon and Kay jewelers. The one with balance is discover.

In my experience no, they don't move the same. The mortgage scores seem more affected by the number of zero balances than the dollar amount, so long as your dollar amounts are low.