topic Re: Utilization and FICO Scoring ?? Credit experts! in Understanding FICO® Scoring

Utilization and FICO Scoring ?? Credit experts!

Anonymous — Sat, 22 Aug 2015 04:46:43 GMT

Hi all! FICO SCORING QUESTION !!!

So, I am trying for an auto loan in October, and my scores have been repairing over the past year after YEARS of bad credit choices. Last year my scores were 490-500 across the board... now, I sit at: TU 566 EQ 561 EX 582. My EX is always my best...but my lender told me I'd need at least a 600 for approval, and at least 620 for decent interest (5-6% vs 12-16%).

Now, my UTIL is currently dragging my score i'm told -- BUT I just made a lot of heavy payments and this is where I now sit:

Barclaycard Apple Visa: $2,600 / $3,000 - 0% APR (89% UTIL)

Western FCU Visa: $1.63 / $1,000 (0% UTIL)

Fingerhut: $0 / $250 (0% UTIL)

Credit One: $150 / $600 (20% UTIL)

Capital One QS1: $300 / $1,000 (30% UTIL)

Carecredit: $1299 / $3000 (44% UTIL)

This puts my overall UTIL around 51% +/- ... Down from 62% last month's reporting. If I lower the overall below 50%, am I likely to get a big boost ? Is it realtisc to get to a 600 on Experian at least in a month or 2 by paying down UTIL largely ? I'll do what it takes to get that score, and I'm told lowering UTIL under 50% can make a very decent boost .. and under 30% overall is even bigger of course. Any advice here would be great!! I'm looking forward to see what kind of boost, even if not big, a lowering of 10-15% overall UTIL will do for my FICO. What steps should I take? Pay down below 50%? Pay more on a specific card? Weigh in ! ***FYI: Only 1 collection left on my report, 6 years old. Last baddie one year ago, 30 day late. All debt current for 12 months. :-)

Re: Utilization and FICO Scoring ?? Credit experts!

Anonymous — Sat, 22 Aug 2015 05:18:26 GMT

@Anonymous wrote:
Hi all! FICO SCORING QUESTION !!!

So, I am trying for an auto loan in October, and my scores have been repairing over the past year after YEARS of bad credit choices. Last year my scores were 490-500 across the board... now, I sit at: TU 566 EQ 561 EX 582. My EX is always my best...but my lender told me I'd need at least a 600 for approval, and at least 620 for decent interest (5-6% vs 12-16%).

Now, my UTIL is currently dragging my score i'm told -- BUT I just made a lot of heavy payments and this is where I now sit:

Barclaycard Apple Visa: $2,600 / $3,000 - 0% APR (89% UTIL)
Western FCU Visa: $1.63 / $1,000 (0% UTIL)
Fingerhut: $0 / $250 (0% UTIL)
Credit One: $150 / $600 (20% UTIL)
Capital One QS1: $300 / $1,000 (30% UTIL)
Carecredit: $1299 / $3000 (44% UTIL)

This puts my overall UTIL around 51% +/- ... Down from 62% last month's reporting. If I lower the overall below 50%, am I likely to get a big boost ? Is it realtisc to get to a 600 on Experian at least in a month or 2 by paying down UTIL largely ? I'll do what it takes to get that score, and I'm told lowering UTIL under 50% can make a very decent boost .. and under 30% overall is even bigger of course. Any advice here would be great!! I'm looking forward to see what kind of boost, even if not big, a lowering of 10-15% overall UTIL will do for my FICO. What steps should I take? Pay down below 50%? Pay more on a specific card? Weigh in ! ***FYI: Only 1 collection left on my report, 6 years old. Last baddie one year ago, 30 day late. All debt current for 12 months. :-)

If you are sure that you can do whatever it takes, then your next step is simple. Pay all your cards down to $0 except one, and make sure that those zero balance cards report as zero for at least three months in a row. Furthermore, get your total CC utilization down to < 9% and keep it below that. Doing that will give you a substantial boost.

Those steps target two factors that harm your score: (1) having multiple cards with a non-zero balance and (2) having a total utilization at 10% or more.

Do you have any installment loans on your profile, open or closed?

Re: Utilization and FICO Scoring ?? Credit experts!

Anonymous — Sat, 22 Aug 2015 05:30:39 GMT

Yes. I have 12 student loans. All current and open from nursing school about $90k. Last late was one year ago. Also auto loan with perfect history. $14,000 left of $20k.

Re: Utilization and FICO Scoring ?? Credit experts!

Anonymous — Sat, 22 Aug 2015 05:50:18 GMT

OK, If you had no installment loans, I'd suggest adding one to your profile. But you have several so no point in doing that.

Only thing for you to do is pay off your cards. Fortunately that will help you a lot.

Re: Utilization and FICO Scoring ?? Credit experts!

Anonymous — Sat, 22 Aug 2015 07:44:41 GMT

You would be the perfect candidate for the "slipper method"

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Slipper-s-method-to-getting-out-of-debt-The-quickest-way-to-a/td-p/4195561

Re: Utilization and FICO Scoring ?? Credit experts!

Anonymous — Sat, 22 Aug 2015 14:03:11 GMT

This would be perfect and ideal. IF I could get a personal loan !!! Tried again and again. Rock and a hard place b tried USAA, NFCU, Western FCU even with s co signer at USAA. no go. So if you advice I'm all ears

Re: Utilization and FICO Scoring ?? Credit experts!

Anonymous — Sat, 22 Aug 2015 16:38:59 GMT

Hey Joey! I think everyone here will agree that the key to financial and credit health for you is paying off your credit cards. That's about $4350 in debt total.

The question is how to do that and how fast you can do that (and how long you can put off the car purchase). It sounds like your debt was much higher and that you are making major progress lately (e.g. you paid off about $1000 last month). If you can keep doing that, it's the simplest thing to do. At that rate you will have it paid off in five months.

There are a few strategies depnding on which of two goals is most important. One strategy focuses on your credit score as the all important thing. If the score drives everything, I would do the followiing:

(a) Pay to zero the cards that will cost you very little money to do that (e.g. the card on which you owe only $1.63 for sure and probably the card that you owe $150).

(b) Then focus on paying off the card that currently has an extremely high utilization.

(c) Then focus on achieving the general goals I suggested (all cards at $0 except one and an overall utilization of under 9%).

Another approach focuses on paying as little interest as possible, which in turn will decrease the total amount of money you have to pay in order to pay off your debts. That approach would focus on paying off high interest cards before lower interest cards. In both approaches I think step (a) would be the same.

You can also explore the option of using an installment loan to pay off your CC debt once you improve your scores somewhat.

Re: Utilization and FICO Scoring ?? Credit experts!

Anonymous — Sat, 22 Aug 2015 22:19:30 GMT

Your score can rise significantly by paying down your balances and improving utilization. No-one can promise you by how much or by when, but it will make a big difference. Some considerations:

1. You're almost maxed out on one card, concentrate on paying that one down and you'll get the biggest bang. Utilization is killing you both on having accounts with balances that are too high AS WELL AS your overall utilization. Ideally you want your total utilization under 9% with no card having more than 30% utilization. You've broken that rule in a few places.

2. Just as an aside, it seems that you should not be applying for more credit right now -- you should put all your energy into getting ALL those balances down to zero and then PIF every month. Job 1 is not your credit score, Job 1 is getting your finances under control. Sounds like you have made some good progress--keep at it! But get to where you never, ever run a balance (excluding PERHAPS those 0% offers if they are really 0% and not 0% + a 3% fee).

Re: Utilization and FICO Scoring ?? Credit experts!

Anonymous — Sat, 22 Aug 2015 22:59:19 GMT

@Anonymous wrote:
Your score can rise significantly by paying down your balances and improving utilization. No-one can promise you by how much or by when, but it will make a big difference. Some considerations:

1. You're almost maxed out on one card, concentrate on paying that one down and you'll get the biggest bang. Utilization is killing you both on having accounts with balances that are too high AS WELL AS your overall utilization. Ideally you want your total utilization under 9% with no card having more than 30% utilization. You've broken that rule in a few places.

2. Just as an aside, it seems that you should not be applying for more credit right now -- you should put all your energy into getting ALL those balances down to zero and then PIF every month. Job 1 is not your credit score, Job 1 is getting your finances under control. Sounds like you have made some good progress--keep at it! But get to where you never, ever run a balance (excluding PERHAPS those 0% offers if they are really 0% and not 0% + a 3% fee).

Hey Canadian! Ordinarily I would agree with you. Overwhelmingly I am of the opinion that the real thing most people need to work on is learning how to spend a lot less than they make and save the difference. In this case, however, the OP is trying to buy a car. The vast majority of people, including people who are very conservative in their spending and credit patterns, still use credit for buying cars and buying houses.

But otherwise I totally agree. Our OP needs to pay off his debts and be very intentional about not opening any line of credit except for a car. Even when he gets things paid off he should continue on the path of fiscal responsibility and develop a plan for saving an increasingly big chunk of his paycheck and putting it toward a rainy day fund and retirement.

Re: Utilization and FICO Scoring ?? Credit experts!

SouthJamaica — Sun, 23 Aug 2015 15:17:38 GMT

@Anonymous wrote:
Hi all! FICO SCORING QUESTION !!!

So, I am trying for an auto loan in October, and my scores have been repairing over the past year after YEARS of bad credit choices. Last year my scores were 490-500 across the board... now, I sit at: TU 566 EQ 561 EX 582. My EX is always my best...but my lender told me I'd need at least a 600 for approval, and at least 620 for decent interest (5-6% vs 12-16%).

Now, my UTIL is currently dragging my score i'm told -- BUT I just made a lot of heavy payments and this is where I now sit:

Barclaycard Apple Visa: $2,600 / $3,000 - 0% APR (89% UTIL)
Western FCU Visa: $1.63 / $1,000 (0% UTIL)
Fingerhut: $0 / $250 (0% UTIL)
Credit One: $150 / $600 (20% UTIL)
Capital One QS1: $300 / $1,000 (30% UTIL)
Carecredit: $1299 / $3000 (44% UTIL)

This puts my overall UTIL around 51% +/- ... Down from 62% last month's reporting. If I lower the overall below 50%, am I likely to get a big boost ? Is it realtisc to get to a 600 on Experian at least in a month or 2 by paying down UTIL largely ? I'll do what it takes to get that score, and I'm told lowering UTIL under 50% can make a very decent boost .. and under 30% overall is even bigger of course. Any advice here would be great!! I'm looking forward to see what kind of boost, even if not big, a lowering of 10-15% overall UTIL will do for my FICO. What steps should I take? Pay down below 50%? Pay more on a specific card? Weigh in ! ***FYI: Only 1 collection left on my report, 6 years old. Last baddie one year ago, 30 day late. All debt current for 12 months. :-)

If you pay off your credit cards completely I think you'll get your score over 600.

Re: Utilization and FICO Scoring ?? Credit experts!

Anonymous — Mon, 24 Aug 2015 01:14:50 GMT

Step 1>>. Get EVERY account below 49% and NEVER go above again!!

Step 2>> Get EVERY account below 29% and NEVER go above again!!

Step 3>> Get EVERY account below 9% and NEVER go above again!!

Step 4>> Be patient!! Rotate cards, don't let a card go dormant (0 bal- with no activity for more than 6 months). Keep your UTIL @ 1-5% average.

Don't apply for more credit, once a year just give them a friendly call asking if they ever just grant credit line increases without having to apply. TALK but DO NOT apply for an increase.

Re: Utilization and FICO Scoring ?? Credit experts!

Anonymous — Mon, 24 Aug 2015 15:38:15 GMT

If you are looking to maximize your credit score in the short term, you should focus on paying down the Barclay Apple Visa first. Your utilization isn't just an average of all cards, it also looks at per-card utilization. All of the rest of your cards have much lower utilization.

Re: Utilization and FICO Scoring ?? Credit experts!

Anonymous — Mon, 24 Aug 2015 16:13:09 GMT

Both Canadian and WRXLVR emphasize first paying down the card that is close to being maxed out.

I basically agree, though my advice was slightly different. Because at least one card has such a tiny balance I suggested paying the 1 or 2 cards off with the ultrasmall balances and then going to work on the card with the very high balance. The reason is that the card with the high Util is going to take our OP a while to pay down. He might as well take care of a couple of the small balances on his way -- it's not going to take slow him down significantly in paying down the big card and he will get two more $0 balance cards right away.

Re: Utilization and FICO Scoring ?? Credit experts!

Anonymous — Mon, 24 Aug 2015 16:19:26 GMT

CreditInDixie! I'm with you. I now have three cards at $0!!! BARCLAY is going to take time. Im hoping to see a score boost early September when all these report as 0 and overall util goes to 47% from 62.5%. We shall see !!! I also may be getting the final two charge offs REMOVED - Cap one and Portfolio recovery. I'm working with execs who are very receptive. They're both under 2 years old ! Cross your gurtles!

Re: Utilization and FICO Scoring ?? Credit experts!

Anonymous — Mon, 24 Aug 2015 16:51:05 GMT

Good luck, Joey! If you can get those two charge-offs removed that will be really sweet for your score. And the two extra zero balances plus steadily punting that balance down on your high card will be a big help. You are very much on your way. Expect to see good things happen over the next few months.