topic Re: maxing out (almost) cards with good apr? in General Credit Topics

maxing out (almost) cards with good apr?

Anonymous — Fri, 21 Nov 2014 18:45:06 GMT

Hey there,

I am using 30% of my credit ability and my credit score has been stable at 710 for a while.

Only a few of my cards have a balance and I always keep it at below 70% of available credit.

Should I consolidate all my debt on those cards with good APR...let's say to 95% of credit?

Is that going to possilby drop my score and raise my APR?

Thanks.

Re: maxing out (almost) cards with good apr?

MarineVietVet — Fri, 21 Nov 2014 19:00:35 GMT

@Anonymous wrote:
Hey there,
I am using 30% of my credit ability and my credit score has been stable at 710 for a while.
Only a few of my cards have a balance and I always keep it at below 70% of available credit.
Should I consolidate all my debt on those cards with good APR...let's say to 95% of credit?
Is that going to possilby drop my score and raise my APR?

Thanks.

Hello.

Everyone's situation is different and there is no one size fits all approach to this and therefore no "ideal" number but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.

Re: maxing out (almost) cards with good apr?

Anonymous — Fri, 21 Nov 2014 19:23:12 GMT

Those are some tips. However, my situation is that I am trying to pay the least interest on my debt that is at 30% of my entire credit ability. I am thinking about moving it completely to the cards that are with low apr and using those to 95% capacity. What about that?

Re: maxing out (almost) cards with good apr?

MarineVietVet — Fri, 21 Nov 2014 21:04:26 GMT

@Anonymous wrote:
Those are some tips. However, my situation is that I am trying to pay the least interest on my debt that is at 30% of my entire credit ability. I am thinking about moving it completely to the cards that are with low apr and using those to 95% capacity. What about that?

I assume you've run the numbers and if what you are considering will cost less money then I can't say it's a bad strategy. I believe that paying down/paying off debt should always come before a few FICO points.

Re: maxing out (almost) cards with good apr?

coldnmn — Fri, 21 Nov 2014 21:52:26 GMT

@Anonymous wrote:
Those are some tips. However, my situation is that I am trying to pay the least interest on my debt that is at 30% of my entire credit ability. I am thinking about moving it completely to the cards that are with low apr and using those to 95% capacity. What about that?

The biggest worry about score is applications. In my opinion if your not applying for anything save the money with the lower apr cards and your scores will rebound as utilization goes down. Good Luck with your credit journey!

Re: maxing out (almost) cards with good apr?

takeshi74 — Fri, 21 Nov 2014 23:42:11 GMT

@Anonymous wrote:
Should I consolidate all my debt on those cards with good APR...let's say to 95% of credit?

30% max is the general recommendation. Short term high utilization isn't an issue but prolonged high utilization can lead to adverse action. If you can pay it down in a few months it might not be a big deal but if you're going to leave those cards with high utilization for a long time I'd advise against it.

@MarineVietVet wrote:
what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month

That recommendation is for maximing scores and is based on how the scoring models favor fewer balances and lower utilization. It's really not necessary unless one is looking to eke out every possible point for an app.

Re: maxing out (almost) cards with good apr?

MarineVietVet — Sat, 22 Nov 2014 03:21:36 GMT

@takeshi74 wrote:

@MarineVietVet wrote:
what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month
That recommendation is for maximing scores and is based on how the scoring models favor fewer balances and lower utilization. It's really not necessary unless one is looking to eke out every possible point for an app.

Exactly. I thought everyone wanted to maximize their scores????

The last paragraph of my post reads: Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.

ETA: I got my scores by seeing this as a hobby.

Re: maxing out (almost) cards with good apr?

Anonymous — Sat, 22 Nov 2014 04:31:09 GMT

Thanks for your replays. In terms of applications, I have made a few successful ones lately and got some new cards, so it seems that my debt utilization does not bother them too much. On the other hand they have been giving me low limits so it does have some influence........One thing that worries me about my credit report is the number of hard inquires - six. I am monitoring that closely.

My main goal is to pay lower interest on my debt but it is not that bad, yet. I am trying to figure out if moving my debt to a few cards with good apr, by increasing their utilization to 85%-90% and having other cards at either 0% or under 10% is gonna put me in worse palce? After all, my overall debt won't change - just the debt on specific cards. There was once in the past when one card actually decreseased my limit so I would like to keep them happy and avoid that .

Re: maxing out (almost) cards with good apr?

coldnmn — Sat, 22 Nov 2014 09:21:46 GMT

@Anonymous wrote:
Thanks for your replays. In terms of applications, I have made a few successful ones lately and got some new cards, so it seems that my debt utilization does not bother them too much. On the other hand they have been giving me low limits so it does have some influence........One thing that worries me about my credit report is the number of hard inquires - six. I am monitoring that closely.

My main goal is to pay lower interest on my debt but it is not that bad, yet. I am trying to figure out if moving my debt to a few cards with good apr, by increasing their utilization to 85%-90% and having other cards at either 0% or under 10% is gonna put me in worse palce? After all, my overall debt won't change - just the debt on specific cards. There was once in the past when one card actually decreseased my limit so I would like to keep them happy and avoid that .

Utilization is figured on individual cards and cards as a group so the risk is there of balance chasing (lowering your CL as it's paid off) so you must weigh your options on what's important. YMMV

Re: maxing out (almost) cards with good apr?

Anonymous — Sun, 23 Nov 2014 19:35:39 GMT

If you're trying to save money on interest and you're planning to carry this debt longer term, have you considered looking into a consolidation or personal loan? I'd think your scores and situation are good enough to possibly get a better rate than what your best card offers (unless you have something like the Ring).

Re: maxing out (almost) cards with good apr?

takeshi74 — Wed, 26 Nov 2014 13:41:06 GMT

@MarineVietVet wrote:
The last paragraph of my post reads: Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.

Sorry, went a bit overboard with the quote trimming.

@Anonymous wrote:
I have made a few successful ones lately and got some new cards, so it seems that my debt utilization does not bother them too much.

Don't rely on that. It's certainly possible to get approvals with high utilization but that doesn't mean that you can just ignore utilization. As you stated your recent low limits are an indicator. High utilization not only affects approvals but limits and APR's granted as well.

@Anonymous wrote:
On the other hand they have been giving me low limits so it does have some influence........One thing that worries me about my credit report is the number of hard inquires - six. I am monitoring that closely.

Inquiries are 10%. Utilization is 30%.

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

If you're worried about the 10% you should definitely be worried about the 30%.

@Anonymous wrote:
There was once in the past when one card actually decreseased my limit so I would like to keep them happy and avoid that .

That's one example of the adverse action I was referring to. As stated above, bother overall and individual utilization matter.