topic Re: Increasing 2, 4, 5 quickly in Understanding FICO® Scoring

Increasing 2, 4, 5 quickly

creditfrustrated01 — Wed, 15 Jan 2025 12:15:59 GMT

I have found myself in a credit bind where my credit utilization is at 100% across 7 credit cards. I am seeking a HELOAN and have run into an issue where my mid score is 678 (675, and 715 are the other 2). I need a mid of 680 to qualify for the loan I am seeking with my preffered lender. I have 100% on time payments and no derogs on my reports. Im seeking the loan to pay off all credit cards and basically swap the debt for a lower interest rate which should save me in the neighborhood of $1400 a month.

This may seem like a simple or silly question, but I need to raise my mid by 2 pts quickly. I have decided to sell a few assets which should generate about 8k. In anyones experience, will paying off at least 10% (6k) of that credit card debt raise the 2, 4, 5 score by those 2 pts? I know I will have to wait for the credit cycle to run its course but I believe all cards should report in the next 2 weeks (end of month). My other option would be to apply that towards my mortgage as additional principle, but I dont know that that will do anything other than lower my loan to value ratio on the existing mortgage for the HELOAN.

I just want to apply that money in the most efficient manner

Re: Increasing 2, 4, 5 quickly

JoeRockhead — Wed, 15 Jan 2025 12:37:31 GMT

Reducing the utilization on your revolving credit card debt will have the greatest positive impact on your scores. Without more detail about the cards you have, their limits and balances, it will be hard for anyone to suggest the best usage of the $8k you have to throw at it.

Re: Increasing 2, 4, 5 quickly

creditfrustrated01 — Wed, 15 Jan 2025 14:39:59 GMT

@JoeRockhead wrote:
Reducing the utilization on your revolving credit card debt will have the greatest positive impact on your scores. Without more detail about the cards you have, their limits and balances, it will be hard for anyone to suggest the best usage of the $8k you have to throw at it.

Limit Balance

24,600 24,320

4,250 4,186

11,000 10,645

2,500 2,218

10,000 9,961

2,975 2,870

1,250 1,212

1,250 1,239

4,000 0 (store card)

6,000 0 (store card)

4,500 0 (store card)

2,000 0 (store card)

$74,325 in limits $56,654 utilized

So all of my standard cards are at essentially 100% utilization. Store cards are at 0% utilization. Would it be best to spend the 8k as an even percentage across accounts or best to pay off 3 of the smaller and spread the rest as a percentage?

Re: Increasing 2, 4, 5 quickly

Thomas_Thumb — Wed, 15 Jan 2025 15:01:09 GMT

Take balances down on all cards to under 89% utilization. Card utilization levels at 90% and above are considered maxed out and subject to additional penalty. Unfortunately, they may balance chase you. If they do your utilization will remain high.

Another option is to pay off your 2 or 3 lowest balance cards so more report $0 and apply the remaining funds to paying down other card balances. This is the better approach - IMO. The Mortgage Ficos penalize a lot for too many cards with balances. Get to 50% or less cards reporting balances.

Re: Increasing 2, 4, 5 quickly

creditfrustrated01 — Wed, 15 Jan 2025 15:12:13 GMT

@Thomas_Thumb wrote:
Take balances down on all cards to under 89% utilization. Card utilization levels at 90% and above are considered maxed out and subject to additional penalty. Unfortunately, they may balance chase you. If they do your utilization will remain high.

Another option is to pay off your 2 or 3 lowest balance cards so more report $0 and apply the remaining funds to paying down other card balances. This is the better approach - IMO. The Mortgage Ficos penalize a lot for too many cards with balances. Get to 50% or less cards reporting balances.

Based on what I am seeing in my credit alerts, paying off cards seems to be the biggest gain of pts. I can pay 3 off which will put my cards with zero balance at 7 and 5 remaining with a balance. I don't think I will get limit chased as I pay down due to my history but it is a possiblity. My maxed out history is short. My high limit history is longer, but I have always paid more than minimums.

Re: Increasing 2, 4, 5 quickly

SouthJamaica — Wed, 15 Jan 2025 15:32:14 GMT

@creditfrustrated01 wrote:
@Thomas_Thumb wrote:
Take balances down on all cards to under 89% utilization. Card utilization levels at 90% and above are considered maxed out and subject to additional penalty. Unfortunately, they may balance chase you. If they do your utilization will remain high.

Another option is to pay off your 2 or 3 lowest balance cards so more report $0 and apply the remaining funds to paying down other card balances. This is the better approach - IMO. The Mortgage Ficos penalize a lot for too many cards with balances. Get to 50% or less cards reporting balances.
Based on what I am seeing in my credit alerts, paying off cards seems to be the biggest gain of pts. I can pay 3 off which will put my cards with zero balance at 7 and 5 remaining with a balance. I don't think I will get limit chased as I pay down due to my history but it is a possiblity. My maxed out history is short. My high limit history is longer, but I have always paid more than minimums.

I agree with @Thomas_Thumb that with the mortgage scores the fastest way to gain points is to pay more accounts down to zero. So in your case that means paying off the four smallest balances,

2,218

2,870

1,212

1,239

IMHO the most efficient use of the remaining $461 would be to spread it around on those 4 accounts to cover trailing interest that will pop up and possibly spoil your zero balance plans.

Re: Increasing 2, 4, 5 quickly

Cowboys4Life — Wed, 15 Jan 2025 15:48:50 GMT

You haven't said who your preferred lender is but let me give you some insight into the HELoan process. Raising your score 2-3 points isn't going to get you approved. I have over $120k in equity in my home. I make all the payments ON TIME for 5 years and always a bit more to bring the principal down faster. I wanted a HELoan to consolidate cc debt that was less than 20k to one simple payment (along with closing those cards with a zero balance) and despite my score being above 700 with 2 of my cards over 90% they put me through the ringer and then wanted me to refinance the home from a 2.5% mortgage to a 7% one claiming it would "save me money" in the long run which was a LIE. They will string you along demanding documents and all kinds of "steps" to get approval and in the end will deny it because you owe money on those cards. HELoans are only approved if you are doing a renovation and don't owe anyone or just plain don't owe cc debt. I opted to tell the guy from USB to pound sand and blocked his number and email. I am using the snowball method and it is going great. I am much happier and glad I didn't refinance to a rate 3 x higher than my current one. Just focus on paying that debt down and you will be better off. Good luck.

Re: Increasing 2, 4, 5 quickly

creditfrustrated01 — Wed, 15 Jan 2025 16:28:02 GMT

@Cowboys4Life wrote:
You haven't said who your preferred lender is but let me give you some insight into the HELoan process. Raising your score 2-3 points isn't going to get you approved. I have over $120k in equity in my home. I make all the payments ON TIME for 5 years and always a bit more to bring the principal down faster. I wanted a HELoan to consolidate cc debt that was less than 20k to one simple payment (along with closing those cards with a zero balance) and despite my score being above 700 with 2 of my cards over 90% they put me through the ringer and then wanted me to refinance the home from a 2.5% mortgage to a 7% one claiming it would "save me money" in the long run which was a LIE. They will string you along demanding documents and all kinds of "steps" to get approval and in the end will deny it because you owe money on those cards. HELoans are only approved if you are doing a renovation and don't owe anyone or just plain don't owe cc debt. I opted to tell the guy from USB to pound sand and blocked his number and email. I am using the snowball method and it is going great. I am much happier and glad I didn't refinance to a rate 3 x higher than my current one. Just focus on paying that debt down and you will be better off. Good luck.

I will certainly not be refinancing. I have a 2.375 rate that I will never mess up. The difference between the 678 and 680 is the sticking point on the loan currently. All options open up to me at 680. Everything else is in place and ready to go. I am doing this through the same lender I bought the home with due to our first experience, which was very pleasant. The reason for the loan is that I am currently backed into a corner with no room to breath. Any small catasrophe will be a major problem financially. If the car breaks down and I have a $2,000 repair bill, I won't be able to pay it. I am commissioned sales so my check value is never a guaranteed amount. I overextended us with a lot of acquisitions for our property the past 4 years during record profits. So if we wanted it, we either paid cash or put it on credit. And as the story goes, the best laid plans of mice and men often go awry. The plan is to go hardcore on the HELoan during my good months so I can get back to normal while having the credit and some cash available for those minor life catastrophes.

Re: Increasing 2, 4, 5 quickly

Thomas_Thumb — Wed, 15 Jan 2025 23:33:33 GMT

@creditfrustrated01 wrote:

Based on what I am seeing in my credit alerts, paying off cards seems to be the biggest gain of pts. I can pay 3 off which will put my cards with zero balance at 7 and 5 remaining with a balance.
... My high limit history is longer, but I have always paid more than minimums.

Paying off 3 cards is a good plan. As SJ mentions, ensure payments cover any trailing interest. Then use the remainder to continue to pay more than the minimum on the other cards.

Once you have the new loan, get all cards under 89% ASAP. Then put focus on paying down your highest APR cards.

Re: Increasing 2, 4, 5 quickly

creditfrustrated01 — Thu, 16 Jan 2025 00:36:57 GMT

@Thomas_Thumb wrote:
@creditfrustrated01 wrote:
Based on what I am seeing in my credit alerts, paying off cards seems to be the biggest gain of pts. I can pay 3 off which will put my cards with zero balance at 7 and 5 remaining with a balance.
... My high limit history is longer, but I have always paid more than minimums.
Paying off 3 cards is a good plan. As SJ mentions, ensure payments cover any trailing interest. Then use the remainder to continue to pay more than the minimum on the other cards.

Once you have the new loan, get all cards under 89% ASAP. Then put focus on paying down your highest APR cards.

That will be my plan on the 3 cards. All minimums have been paid until the next cycle which happens over the next 10 days across the cards. Bonus news is my sell off netted 10k so a little more to work with than I was originally budgeting. Payoff of 3 cards including trailing interest. Pay remainder of cards to 89% including trailing interest will be $10,750 approximately. It will be a tight month from there until Loan goes through. But, that is the predicament I put myself in.

Once loan goes through all cards will be paid off completely. Swapping that higher interest for the lower interest loan with a payment that is more manageable during tighter months. Will also have operating capital in the kitty in order to stay off the cards.

Re: Increasing 2, 4, 5 quickly

FicoMike0 — Thu, 16 Jan 2025 04:23:32 GMT

Sounds like a great plan!

Re: Increasing 2, 4, 5 quickly

FlaDude — Fri, 17 Jan 2025 03:27:07 GMT

If any of your cards are issued by Chase, they will mid cycle report when the balance hits zero. If you end up with trailing interest when the statement cuts, you can again PIF and it will again mid cycle report.

Re: Increasing 2, 4, 5 quickly

Realist — Sat, 25 Jan 2025 05:02:21 GMT

I'm going to be in the camp to not pay off any lines at all. Focus on the utilization, even if this means taking down easy to pay off loans to a mere $100. Remember utilization factors in noticeably, and will reflect accordingly. The moment you pay off a card, or multiple cards, you are inviting a bump, good or bad, unto the score.

Lenders weigh the quantity of debt you hold, and the makeup of debt you hold. They want to see your back up against the wall, to show that you can handle financial debt and obligations. While holding a great deal of credit card debt isn't diversity of overall debt type, you do have the ability to control utilization, and you do have the option not to cause unnecessary ripples that would occur by paying off cards in full.

Once you secure that consolidation loan, then it sounds like it's smooth sailing. Good luck.

Re: Increasing 2, 4, 5 quickly

creditfrustrated01 — Sat, 25 Jan 2025 12:17:09 GMT

@Realist wrote:
I'm going to be in the camp to not pay off any lines at all. Focus on the utilization, even if this means taking down easy to pay off loans to a mere $100. Remember utilization factors in noticeably, and will reflect accordingly. The moment you pay off a card, or multiple cards, you are inviting a bump, good or bad, unto the score.

Lenders weigh the quantity of debt you hold, and the makeup of debt you hold. They want to see your back up against the wall, to show that you can handle financial debt and obligations. While holding a great deal of credit card debt isn't diversity of overall debt type, you do have the ability to control utilization, and you do have the option not to cause unnecessary ripples that would occur by paying off cards in full.

Once you secure that consolidation loan, then it sounds like it's smooth sailing. Good luck.

LOL. Point taken on the paying off of cards. My availability of the 10k I had to work with was basically split into 2 amounts due to a check hold on the 10k check. I took that first half availability and paid off my 3 lowest cards. One has already reported and my Fico 8 score dropped 3 pts on Experian. It's so counter intuitive to pay something off and have your score drop instead of increase. The other 2 havent reported yet that I can see, but i suspect it may be similar. The 2nd half availability comes after all but 1 of my cards have cycled so it will go towards that one card (only enough to pay off 30%) and paying the minimums+ on the remaining cards that will have already cycled.

Needless to say, still creditfrustrated.

Re: Increasing 2, 4, 5 quickly

SouthJamaica — Sat, 25 Jan 2025 13:24:22 GMT

@creditfrustrated01 wrote:
@Realist wrote:
I'm going to be in the camp to not pay off any lines at all. Focus on the utilization, even if this means taking down easy to pay off loans to a mere $100. Remember utilization factors in noticeably, and will reflect accordingly. The moment you pay off a card, or multiple cards, you are inviting a bump, good or bad, unto the score.

Lenders weigh the quantity of debt you hold, and the makeup of debt you hold. They want to see your back up against the wall, to show that you can handle financial debt and obligations. While holding a great deal of credit card debt isn't diversity of overall debt type, you do have the ability to control utilization, and you do have the option not to cause unnecessary ripples that would occur by paying off cards in full.

Once you secure that consolidation loan, then it sounds like it's smooth sailing. Good luck.
LOL. Point taken on the paying off of cards. My availability of the 10k I had to work with was basically split into 2 amounts due to a check hold on the 10k check. I took that first half availability and paid off my 3 lowest cards. One has already reported and my Fico 8 score dropped 3 pts on Experian. It's so counter intuitive to pay something off and have your score drop instead of increase. The other 2 havent reported yet that I can see, but i suspect it may be similar. The 2nd half availability comes after all but 1 of my cards have cycled so it will go towards that one card (only enough to pay off 30%) and paying the minimums+ on the remaining cards that will have already cycled.

Needless to say, still creditfrustrated.

1. Your paying one account down to zero did not cause the 3 point score drop; something else caused it.

2. The plan of getting cards down to zero is the best way to increase FICO 2, 4, and 5 quickly. Stick with the plan. FICO 8 is NOT the same as FICO 2.

Re: Increasing 2, 4, 5 quickly

creditfrustrated01 — Sat, 25 Jan 2025 14:05:22 GMT

@SouthJamaica wrote:
@creditfrustrated01 wrote:
@Realist wrote:
I'm going to be in the camp to not pay off any lines at all. Focus on the utilization, even if this means taking down easy to pay off loans to a mere $100. Remember utilization factors in noticeably, and will reflect accordingly. The moment you pay off a card, or multiple cards, you are inviting a bump, good or bad, unto the score.

Lenders weigh the quantity of debt you hold, and the makeup of debt you hold. They want to see your back up against the wall, to show that you can handle financial debt and obligations. While holding a great deal of credit card debt isn't diversity of overall debt type, you do have the ability to control utilization, and you do have the option not to cause unnecessary ripples that would occur by paying off cards in full.

Once you secure that consolidation loan, then it sounds like it's smooth sailing. Good luck.
LOL. Point taken on the paying off of cards. My availability of the 10k I had to work with was basically split into 2 amounts due to a check hold on the 10k check. I took that first half availability and paid off my 3 lowest cards. One has already reported and my Fico 8 score dropped 3 pts on Experian. It's so counter intuitive to pay something off and have your score drop instead of increase. The other 2 havent reported yet that I can see, but i suspect it may be similar. The 2nd half availability comes after all but 1 of my cards have cycled so it will go towards that one card (only enough to pay off 30%) and paying the minimums+ on the remaining cards that will have already cycled.

Needless to say, still creditfrustrated.

1. Your paying one account down to zero did not cause the 3 point score drop; something else caused it.
2. The plan of getting cards down to zero is the best way to increase FICO 2, 4, and 5 quickly. Stick with the plan. FICO 8 is NOT the same as FICO 2.

Just going by the myfico alert. "The balance on one of your accounts has decreased by $1259 Experian -3 Equifax +0". That was 1 of 3 payed off cards.

I do realize that the Fico 2, 4, 5 is not the same, however it's not visible until I pull a credit report, which I wont do until this exercise in payoff plays out. I enacted a plan and now I pretty much need to see it through either way. At the very least, that eliminated 3 payments from the monthly budget.

Re: Increasing 2, 4, 5 quickly

Thomas_Thumb — Sat, 25 Jan 2025 17:21:12 GMT

@creditfrustrated01

Good, follow the plan but do pay more than minimums, particularly on highest UT cards. Once you are at 50% or less cards with balances, reducing all card utilizations below 89% will be more impactful on score. Don't put any further effort on taking more cards to $0. Also, don't try to minimize balance on highest CL card.

Again - it is not the highest card balance that Fico scores. It is the highest card utilization. So, a $2000 CL card with a $1900 balance => 95% UT is worse than a $20k card with a $16k balance => 80% UT. If you have 3 cards at 95% UT, they all must be reduced. If only 1 or 2 are reduced, highest card UT is still 95%.

When all is done, pull a 3B and please report back with Fico 8 and Fico mortgage scores before/after. Include date on aggregate utilization, number of cards with balances, highest UT % on any card and any balance chasing. Try to ignore interim scores as they are not value add and just serve as a distraction - IMO.

BTW - As you may know, trigger events cause scores to be pulled. Changes in other accounts on file, such as an increase in high card UT, are often the primary reason for a shift in score.

Re: Increasing 2, 4, 5 quickly

SouthJamaica — Sun, 26 Jan 2025 19:29:39 GMT

@creditfrustrated01 wrote:
@SouthJamaica wrote:
@creditfrustrated01 wrote:
@Realist wrote:
I'm going to be in the camp to not pay off any lines at all. Focus on the utilization, even if this means taking down easy to pay off loans to a mere $100. Remember utilization factors in noticeably, and will reflect accordingly. The moment you pay off a card, or multiple cards, you are inviting a bump, good or bad, unto the score.

Lenders weigh the quantity of debt you hold, and the makeup of debt you hold. They want to see your back up against the wall, to show that you can handle financial debt and obligations. While holding a great deal of credit card debt isn't diversity of overall debt type, you do have the ability to control utilization, and you do have the option not to cause unnecessary ripples that would occur by paying off cards in full.

Once you secure that consolidation loan, then it sounds like it's smooth sailing. Good luck.
LOL. Point taken on the paying off of cards. My availability of the 10k I had to work with was basically split into 2 amounts due to a check hold on the 10k check. I took that first half availability and paid off my 3 lowest cards. One has already reported and my Fico 8 score dropped 3 pts on Experian. It's so counter intuitive to pay something off and have your score drop instead of increase. The other 2 havent reported yet that I can see, but i suspect it may be similar. The 2nd half availability comes after all but 1 of my cards have cycled so it will go towards that one card (only enough to pay off 30%) and paying the minimums+ on the remaining cards that will have already cycled.

Needless to say, still creditfrustrated.

1. Your paying one account down to zero did not cause the 3 point score drop; something else caused it.
2. The plan of getting cards down to zero is the best way to increase FICO 2, 4, and 5 quickly. Stick with the plan. FICO 8 is NOT the same as FICO 2.
Just going by the myfico alert. "The balance on one of your accounts has decreased by $1259 Experian -3 Equifax +0". That was 1 of 3 payed off cards.

I do realize that the Fico 2, 4, 5 is not the same, however it's not visible until I pull a credit report, which I wont do until this exercise in payoff plays out. I enacted a plan and now I pretty much need to see it through either way. At the very least, that eliminated 3 payments from the monthly budget.

The MyFICO alert does not indicate a cause and effect relationship between the substance of the alert and the score reported. MyFICO alerts don't provide reasons for a score change. There are certain events which trigger MyFICO alerts. If there happens to be any difference between your present score at that particular bureau and the previous score reported to you from that bureau, the score change is tacked on to the alert. There is not necessarily any connection at all between the score change and the alert substance.

MyFICO explains this as follows:

Why did my score go up when I got an alert for something negative (or why did my score go down when I got an alert for something positive)?

The short answer: Your FICO® Score may change because of other events not monitored by an alert.

Whenever we send you a credit alert, we also send an updated FICO Score. To ensure you get the most current score, we calculate it based on your entire credit report at that point in time—not just the new information on the alert. This means your new score may reflect other changes that are outside of the things we watch for (see everything we monitor).

Sometimes you may see your score increase when you think it should’ve decreased, and vice-versa, but you’ll always have your most up-to-date and accurate score.
https://support.myfico.com/hc/en-us/articles/360038084633