topic Re: Utilization Question in General Credit Topics

Utilization Question

brcamacho — Wed, 21 May 2014 17:52:35 GMT

I am in the process of buying a home and was curious if moving some of my debt around would help my score, i know it would help my dti a little.

Total UTIL is 22.98%

Would it make sense to take a zero %balance transfer offer and move the balances of 2 of the cards, which would take me from balances on 5 cards to only 3. The catch is it would take the balance transfer card up to 85% Util.

Any input would be great.

Thanks

Re: Utilization Question

DevotionToU — Wed, 21 May 2014 17:54:39 GMT

It is generally advised that someone does not have any applications for credit for up to 1 yr before receiving a mortgage loan.

Re: Utilization Question

brcamacho — Wed, 21 May 2014 17:56:14 GMT

Let me clairify. The balance transfer offer is on an existing card the is a zero balance at the moment. It will not be a new line of credit.

Thanks

Re: Utilization Question

DevotionToU — Wed, 21 May 2014 18:01:36 GMT

Can't say I know if that strategy would do more harm than good. I did just recently balance transfer two balances (though it was to new cards) so my experience would not be the same, as my utilization was lowered drastically due to the new TLs.

Re: Utilization Question

SunriseEarth — Wed, 21 May 2014 18:02:38 GMT

@brcamacho wrote:
I am in the process of buying a home and was curious if moving some of my debt around would help my score, i know it would help my dti a little.

Total UTIL is 22.98%

Would it make sense to take a zero %balance transfer offer and move the balances of 2 of the cards, which would take me from balances on 5 cards to only 3. The catch is it would take the balance transfer card up to 85% Util.

Any input would be great.

Thanks

What's the UTIL on each of the 2 cards? I'm not sure there are many situations where nearly maxing out a CC would help.

What about seeking SP CLIs to improve UTIL?

Re: Utilization Question

brcamacho — Wed, 21 May 2014 18:17:14 GMT

One card is at 61.7% and the other is at 21.15%

Re: Utilization Question

Anonymous — Wed, 21 May 2014 18:29:24 GMT

@brcamacho wrote:
I am in the process of buying a home and was curious if moving some of my debt around would help my score, i know it would help my dti a little.

Total UTIL is 22.98%

Would it make sense to take a zero %balance transfer offer and move the balances of 2 of the cards, which would take me from balances on 5 cards to only 3. The catch is it would take the balance transfer card up to 85% Util.

Any input would be great.

Thanks

This seems like a dubious tradeoff, because maxing individual cards is a big deal.

One thing that might be possible in some scenarios is a move like this:

450 / 500 -> 450 / 5000

This type of move doesn't affect overall utilization, but can help scores anyway because of improving individual card utilization.

Re: Utilization Question

Bman70 — Wed, 21 May 2014 19:42:12 GMT

When I was approved for a mortgage loan in 2012, I had taken out a personal loan from my CU only weeks before. One of my cards was close to 90%. My scores were mid 700s. I think sometimes we overthink these details when if the overall picture looks good banks will usually like your business. The lender told me, "You have so little debt and your DTI is so low that it's an easy approval." So, even though my card util was high, it was only a $2500 card. And the personal loan was just under $3k. So compared to my income those payments were inconsequential, leaving nothing to compete with potential mortgage payments. Lots of factors play into it - of course I had high scores. Paying down the cards would probably have a better effect than moving balances. But usually honest conversations with the lender solve any minor issues.

Re: Utilization Question

Bman70 — Wed, 21 May 2014 20:07:39 GMT

Keep in mind (regarding my above experience) - that was a VA home loan. The VA backing probably gives lenders a sense of security possibly lacking in other loans. Still - at the time I had never heard of all the things to worry about before apping for a mortgage, so I didn't bother to fine-tune my scores. It was a really stress-free process because I knew so little.

Re: Utilization Question

brcamacho — Wed, 21 May 2014 20:09:31 GMT

Makes sense. I already got preapproved with NFCU. I just wont do aything but pay all my bills on time until i close.

Thanks

Re: Utilization Question

takeshi74 — Thu, 22 May 2014 12:39:25 GMT

@brcamacho wrote:
Would it make sense to take a zero %balance transfer offer and move the balances of 2 of the cards, which would take me from balances on 5 cards to only 3. The catch is it would take the balance transfer card up to 85% Util.

I'd say not. Total util and DTI aren't going to change as a result of a BT. Nearly maxing a card won't help either.

@Bman70 wrote:
When I was approved for a mortgage loan in 2012, I had taken out a personal loan from my CU only weeks before. One of my cards was close to 90%. My scores were mid 700s. I think sometimes we overthink these details

It really all depends on the specific mortgage lender and what they're looking for.