topic Re: Reducing Utilization...How many points? in Understanding FICO® Scoring

Reducing Utilization...How many points?

Anonymous — Mon, 09 Jun 2008 20:47:09 GMT

My current CC util is around 96% (I know, I know, I know...). We are planning on paying off a lot of the cards within the next week, and getting util to around 69%. Does anyone know how many points this will bump me up?

My goal over the next year is to get EVERYTHING paid off - but until then, I'm hoping for at least a little reward for paying down $12k.

Thanks!

Re: Reducing Utilization...How many points?

Anonymous — Mon, 09 Jun 2008 20:51:02 GMT

Can be over 100 points if you PIF, maybe half that if you reduce it 50%.

Message Edited by ilovepizza on 06-09-2008 04:51 PM

Re: Reducing Utilization...How many points?

Anonymous — Mon, 09 Jun 2008 21:03:04 GMT

By reducing my utilization from about 85% to around 35%

I've gone from 654/684/694 to the scores listed in my signature from March until June!

It made the biggest difference in Experian from 684 to 754!

Message Edited by caliborne on 06-09-2008 02:03 PM

Re: Reducing Utilization...How many points?

Anonymous — Mon, 09 Jun 2008 21:36:40 GMT

ilovepizza wrote: Can be over 100 points if you PIF, maybe half that if you reduce it 50%. Message Edited by ilovepizza on 06-09-2008 04:51 PM

Not sure I understand...sorry....

I have the following accounts:

Balance C/L Util

AmEx 1,002 1,000 100%

AmEx 947 1,000 95%

AmEx 12,192 12,100 101%

AmEx 5,801 6,000 97%

AmEx 992 1,000 99%

Barclays 406 500 81%

Cap 1 556 500 111%

Cap 1 717 750 96%

Hooters 1,124 1,200 94%

Target 4,980 5,000 100%

HSBC 78 300 26%

WaMu 1,186 1,200 99%

Home Depot 1,150 1,500 77%

Totals 31,131 32,050 97%

Are you suggesting that I pay most of the cards off (like all but the two large AmEx & the Target)? Or should I pay the most on the cards with the larger balances (like pay off the $12k AmEx and leave the others)?

Thank you for the assistance!!!

Re: Reducing Utilization...How many points?

Anonymous — Mon, 09 Jun 2008 23:56:37 GMT

Heidi - if you completely pay off your cards, save for one with like a 15 dollar balance, you will probably gain 100 points. If you pay half of them off completely or all of them down to 50% utility then you will probably have at least a 50 point increase in your score.

Can you afford to pay them all off quickly?

You would get the biggest impact for your buck by paying off all of your small balance cards first - then working on the high balance accounts. But financially it makes the most sense to pay down the high interest accounts first if you can't pay them all off very quickly.

Re: Reducing Utilization...How many points?

haulingthescoreup — Tue, 10 Jun 2008 00:21:27 GMT

And whether you're looking at best financial sense or best scoring sense, one huge thing jumps out at me: you're in serious danger of having the door slammed shut on you by AmEx (definitely) and WaMu (probably,) and who knows which other cards. Not only does each CCC know your balance with them, they know your balances with every else if they soft you.

I'd start throwing serious money at those two card companies as well as paying about $10 over the minimum on the others while you seriously reduce individual card utils.

I'm afraid that they might be sharpening the axes even now.

Message Edited by haulingthescoreup on 06-09-2008 05:21 PM

Re: Reducing Utilization...How many points?

Anonymous — Tue, 10 Jun 2008 01:23:37 GMT

I appreciate all of the advice. Please note - I have not had these current balances very long. We just got married on 5/25, so 90% of it was during the past two months. That's no excuse, I know, but I'm hoping that the CCC's will see that we don't have a long standing history of keeping high util.

Our main focus now is to get the balances paid down as quickly as possible and i'm just trying to figure out how best to use the $12k that we have to put towards it.

Thanks again to all who have chimed in!

Re: Reducing Utilization...How many points?

Anonymous — Tue, 10 Jun 2008 01:24:56 GMT

One other thing...we ALWAYS pay more than the minimum. Usually 2-3 times what they ask on the lower balance cards.

Re: Reducing Utilization...How many points?

RobertEG — Tue, 10 Jun 2008 06:46:50 GMT

Heidi, I would pay a whole bunch of SERIOUS attention to hauling's comment.

Congrats on your marriage, and I understand the debt was incurred only in the past two months, but unfortunately when it comes to %util, FICO does not care about three months ago, only today. It shows are are maxed out. As hauling has warned, loss of current credit limit on any of those current cards, which is quite possible, willl compound your woes immensely.

Almost 70% of your current credit liimit (21,000 of 32,00) is based on your AMEX cards. In this tight credit crunch, CCCs, are routinely restricting credit to those showing higher current risk. AMEX has never been one for extending high credit when balances bulge. If you lose the 12000 AMEX CL liimit on just that one card, you will be way over 100% in total util, with a substatial FICO hit.

There is a very good reason why FICO looks at high current (not historical) revolv %util as a high weighting factor. It is because this is one of the earliest indicators of immediate credit risk. AMEX does not know that you were just married, and that you may be able in the near future to pay them down. They see a red flag in their computer pattern.

You are maxed, or close to being maxed, on 12 of your 13 revolving TLs, and that is a very serious indicator of risk. The only account with a util under 80% is your lowest CL (HSBC) account.

Sure, paying down %util to 69% will give you some FICO boost, but potential loss of the CLs on other cards, should they choose to either shut you down, or drasticaly reduce your CL on those cards, will push our overall % util above the roof.

I would heed hauling's warning, and get on the phone to AMEX and explain your situation, and try to retain their CLs as as first step.

Message Edited by RobertEG on 06-09-2008 11:10 PM

Message Edited by RobertEG on 06-09-2008 11:23 PM

Message Edited by RobertEG on 06-09-2008 11:46 PM

Re: Reducing Utilization...How many points?

RobertEG — Tue, 10 Jun 2008 06:43:19 GMT

Re-reading your posts, it appears that you have the financial means to reduce your %uti by 20% in the next few weeks, which is $6,000 in payments! WOW!

Tell AMEX that! They may postpone any reconsideration of your account standing if you can deliver that kinda bang!

Re: Reducing Utilization...How many points?

Anonymous — Tue, 10 Jun 2008 14:00:46 GMT

RobertEG wrote:
Re-reading your posts, it appears that you have the financial means to reduce your %uti by 20% in the next few weeks, which is $6,000 in payments! WOW!
Tell AMEX that! They may postpone any reconsideration of your account standing if you can deliver that kinda bang!

Actually, Robert, we can pay down $12,000 right now (maybe my % calculations were off) - I'm just trying to see how to divide it up. I'll get on the phone with AmEx today...

Thanks to all!!!

Message Edited by HeidiBoo on 06-10-2008 07:00 AM

Re: Reducing Utilization...How many points?

mrlimo — Wed, 11 Jun 2008 01:45:24 GMT

AmEx 1,002 1,000 100% $502

AmEx 947 1,000 95% $447

AmEx 12,192 12,100 101% $2964

AmEx 5,801 6,000 97% $2801

AmEx 992 1,000 99% $492

Barclays 406 500 81% $156

Cap 1 556 500 111% $306

Cap 1 717 750 96% $342

Hooters 1,124 1,200 94% $524

Target 4,980 5,000 100% $2480

HSBC 78 300 26% $78

WaMu 1,186 1,200 99% $586

Home Depot 1,150 1,500 77% $400

Totals 31,131 32,050 97% $12,078

if you were to pay these amounts on all your cards you would bring every card but the 12100 amex line to 50% util and even the 12100 line would be at just under 76%.

you have to get all of those ballances out of the over drawn limits.

There was just a video on www.comcast.net website on a guy (Wesley Wannamaker) in not as bad shape as you but simillar. The ccc took away his credit limits putting him in over the limit every month causing fee's to snowball to the point the interest, over limit fee's were driving him broke. let me see if I can find that clip for you...

go to videos then under search type "congress takes on credit card debt".