topic Re: Credit utilization and effect on credit score in Understanding FICO® Scoring

Credit utilization and effect on credit score

mxml11 — Mon, 19 Feb 2024 19:08:28 GMT

Hi,

My overall utilization ratio is pretty good (14%) but I carry 3 credit cards with balance (due to previous balance transfer offers) and it is hurting my credit score (CC1 - 87%, CC2 - 68%, CC3 - 62%).

I have some extra capacity to cover some of that debt, so which would be my best course of action? Paying off the 62% card down to 49%? Or paying off the 87% card down to 71%? Which would have a better short term effect on my score?

Thanks!

Re: Credit utilization and effect on credit score

Rogue46 — Mon, 19 Feb 2024 20:03:08 GMT

I would pay down the 87% card first as it is effectively maxed out per the scoring model.

Re: Credit utilization and effect on credit score

pizzadude — Mon, 19 Feb 2024 20:59:50 GMT

@mxml11 wrote:
Hi,

My overall utilization ratio is pretty good (14%) but I carry 3 credit cards with balance (due to previous balance transfer offers) and it is hurting my credit score (CC1 - 87%, CC2 - 68%, CC3 - 62%).
I have some extra capacity to cover some of that debt, so which would be my best course of action? Paying off the 62% card down to 49%? Or paying off the 87% card down to 71%? Which would have a better short term effect on my score?

Thanks!

Agree the highest utilization is probably the best place to start but you should also assess what this payment does to your overall utilization as this is another significant scoring factor.

Re: Credit utilization and effect on credit score

tcbofade — Tue, 20 Feb 2024 17:25:01 GMT

That's a tough call... you're right on the line...

If you can get that 87% card under 69%, you'll see a nice score bump.

Re: Credit utilization and effect on credit score

Shooting-For-800 — Wed, 21 Feb 2024 03:49:54 GMT

I would get everything under 69% first.

Then 49% then 29%, etc.

GL!

Re: Credit utilization and effect on credit score

SouthJamaica — Wed, 21 Feb 2024 04:01:50 GMT

@mxml11 wrote:
Hi,

My overall utilization ratio is pretty good (14%) but I carry 3 credit cards with balance (due to previous balance transfer offers) and it is hurting my credit score (CC1 - 87%, CC2 - 68%, CC3 - 62%).
I have some extra capacity to cover some of that debt, so which would be my best course of action? Paying off the 62% card down to 49%? Or paying off the 87% card down to 71%? Which would have a better short term effect on my score?

Thanks!

Welcome to the forum.

Get the CC1 down to 68%, then start getting the 3 of them down to 48%.

Re: Credit utilization and effect on credit score

CameAlongWay — Wed, 21 Feb 2024 07:05:46 GMT

Yeah all have to go anything over 29% hurts, I just opened 2 ballance transfer cards one is 90% one 69% ouch 50 point drop ccu is 15% but 1 maxed card really hurts.

Re: Credit utilization and effect on credit score

pizzadude — Wed, 21 Feb 2024 14:47:42 GMT

@CameAlongWay wrote:
Yeah all have to go anything over 29% hurts, I just opened 2 ballance transfer cards one is 90% one 69% ouch 50 point drop ccu is 15% but 1 maxed card really hurts.

This might be one of those "finances over FICOs" situations - if you're able to pay off debt at a much lower interest rate then it's worth the temporary hit to your scores.

Re: Credit utilization and effect on credit score

Horseshoez — Wed, 21 Feb 2024 15:04:38 GMT

@pizzadude wrote:
@CameAlongWay wrote:
Yeah all have to go anything over 29% hurts, I just opened 2 ballance transfer cards one is 90% one 69% ouch 50 point drop ccu is 15% but 1 maxed card really hurts.
This might be one of those "finances over FICOs" situations - if you're able to pay off debt at a much lower interest rate then it's worth the temporary hit to your scores.

It looks like @pizzadude beat me to the punch with the "Finances over FICO" comment.

@mxml11, are you planning on applying for a mortgage or another type of credit instrument? If not, let your scores do what they will and follow the path for your best financial health.