topic Re: Utilization on One Card versus Multiple Cards and Loans in Understanding FICO® Scoring

Utilization on One Card versus Multiple Cards and Loans

Creditdreamer — Wed, 10 Nov 2021 22:36:00 GMT

Hi all,

I have searched the forums and have had a hard time finding info on all of this that would be specific to my situation.

I have a total of $150,000 in available credit

I have no balances (or very small balances) on cards and the following balance transfers:

PenFed-$1000 balance on $17,500 CL---5.7%

Wells Fargo-$7000 on $19,000 CL---36.8%

CitiCards-$11900 on 12,300 CL---96.7%

These are all at 0%. We are buying a new car in April and trying to optimize score before applying for the loan. The Citicard BT doesn't expire until 02/23 but paying it down a reasonable amount would be doable if that is severely negatively affecting my score. Overall utilization is at 20%. Discover Fico 8 from TU says 721 score.

I also have a mortgage of $2951, a small mortgage of $314, and a vehicle payment of $368.

Would it help my overall profile to convert the credit card debt to a loan instead of having it as credit card debt? Financially that wouldn't necessarily make sense. With my score as it is, I got approved at 5.5% for the auto loan for 72 months but would like to get down to around 2% ideally.

If I don't do a loan to pay off/down the credit cards, and assuming I have a finite amount I can pay between now and March ($5000 or so), where should it go and what should my goals be for utilization for each of the cards and the overall utilization before I reapply for the auto loan?

Re: Utilization on One Card versus Multiple Cards and Loans

SouthJamaica — Thu, 11 Nov 2021 02:05:18 GMT

@Creditdreamer wrote:
Hi all,

I have searched the forums and have had a hard time finding info on all of this that would be specific to my situation.

I have a total of $150,000 in available credit
I have no balances (or very small balances) on cards and the following balance transfers:
PenFed-$1000 balance on $17,500 CL---5.7%
Wells Fargo-$7000 on $19,000 CL---36.8%
CitiCards-$11900 on 12,300 CL---96.7%

These are all at 0%. We are buying a new car in April and trying to optimize score before applying for the loan. The Citicard BT doesn't expire until 02/23 but paying it down a reasonable amount would be doable if that is severely negatively affecting my score. Overall utilization is at 20%. Discover Fico 8 from TU says 721 score.

I also have a mortgage of $2951, a small mortgage of $314, and a vehicle payment of $368.

Would it help my overall profile to convert the credit card debt to a loan instead of having it as credit card debt? Financially that wouldn't necessarily make sense. With my score as it is, I got approved at 5.5% for the auto loan for 72 months but would like to get down to around 2% ideally.

If I don't do a loan to pay off/down the credit cards, and assuming I have a finite amount I can pay between now and March ($5000 or so), where should it go and what should my goals be for utilization for each of the cards and the overall utilization before I reapply for the auto loan?

You should pay both Wells Fargo and Citi down to balances of 28% or less.

Re: Utilization on One Card versus Multiple Cards and Loans

Creditdreamer — Thu, 11 Nov 2021 03:28:42 GMT

If I can't get them paid fully down to 28%, would it be worth BT to another card as long as all of the BT cards are 28% or less and overall utilization is 9% or less?

Re: Utilization on One Card versus Multiple Cards and Loans

SouthJamaica — Thu, 11 Nov 2021 13:51:28 GMT

@Creditdreamer wrote:
If I can't get them paid fully down to 28%, would it be worth BT to another card as long as all of the BT cards are 28% or less and overall utilization is 9% or less?

Yes but if you're paying balance transfer fees that can be an expensive proposition.

Re: Utilization on One Card versus Multiple Cards and Loans

Creditdreamer — Thu, 11 Nov 2021 14:58:17 GMT

If I paid a 3% balance transfer fee on 10,000 (to different cards), I would end up with a $300 total fee. If doing that could make enough difference in my overall profile, it would be worth it. Having a 5.5% versus a 2% loan on the car would cost me $175 more a month for the first couple months in interest alone. So it's more of a cost benefit analysis. If it could help me get to the next level, it would pay for itself.

Re: Utilization on One Card versus Multiple Cards and Loans

SouthJamaica — Thu, 11 Nov 2021 15:04:49 GMT

@Creditdreamer wrote:
If I paid a 3% balance transfer fee on 10,000 (to different cards), I would end up with a $300 total fee. If doing that could make enough difference in my overall profile, it would be worth it. Having a 5.5% versus a 2% loan on the car would cost me $175 more a month for the first couple months in interest alone. So it's more of a cost benefit analysis. If it could help me get to the next level, it would pay for itself.

Then go for it. It will definitely improve your scores.

Re: Utilization on One Card versus Multiple Cards and Loans

Creditdreamer — Thu, 11 Nov 2021 15:13:37 GMT

Okay cool! Thanks for your input! And from a loan perspective, the loans won't negatively affect it since they're all paid on time?

Re: Utilization on One Card versus Multiple Cards and Loans

SouthJamaica — Thu, 11 Nov 2021 15:43:47 GMT

@Creditdreamer wrote:
Okay cool! Thanks for your input! And from a loan perspective, the loans won't negatively affect it since they're all paid on time?

Well that's a whole 'nother question.

I have never examined the effects of loan utilization on the auto scores. I have tested it multiple times but only on FICO Classic 8's and FICO mortgage scores. But as a general proposition, if your aggregate open loan installment utilization percentage is 9% or less of the original loan amounts, you are in the sweet spot. If it's higher than that, you could improve your scores by getting the aggregate below 10%.

You definitely should not be adding any loans now because that would just depress your scores.

Re: Utilization on One Card versus Multiple Cards and Loans

Creditdreamer — Thu, 11 Nov 2021 18:07:57 GMT

Got it. I wont add any new loans.

I processed the BTs.

Moved to these cards:

4200 to 17500 card---24% util

2600 to 8100 card---32% util

From these cards:

12300 CL card now at 4100---33% util

19000 CL card now at 5900---31% util

Also paid down 12300 by 2000 before doing BT.

Overall utilization as of now is 10.8%

By February with paying payments (I always pay more than the minimum), I expect to be at 9.5% overall utilization (by taking all the above cards to below 28%). Should I make it below 9% or is 9.5% sufficient for optimum?

Total cost: $204

If it works, it'll be majorly worth it!