topic Re: Seeking advice on building credit when utilization is high in General Credit Topics

Seeking advice on how to improve credit when utilization is high

Expansion — Sat, 26 Feb 2022 23:57:42 GMT

FinStar recommended I come over here and post.

I am looking to improve my credit.

My utilization is high (85.6%) because of a very rough period a while back where I had to use my cards to cover my butt.

My credit has been established since 2001.

651 Equifax,

675 TransUnion,

not sure about my Experian.

I always pay on time. What's tanking my score is the high utilization.

Adding this in for context:

My situation is stable. My income is stable and growing. My business is full with a waitlist.

I don't need credit right now. I'm in a position where I have the mental space and energy to work on this. I am not pursuing bankrupcy, that's not my path. Respect to those who do, but that's not where I'm at.

I would appreciate any suggestions.

Right now I am continuing to steadily pay things down. I haven't added to my balances for several years now.

Also, I am, over time, getting small consolidation loans (first one through lending club paid off, second one through upstart just begun) to move utilization off the credit cards and also reduce the APRs.

Because there have been times when I was approved for something unexpectedly -- lending club when I was in much worse position than I am now; upstart this past November -- I wanted to reach out to those who have a better sense of the terrain, if there are opportunities I might not be aware of that might be worth exploring.

Here's what I've got:

CreditOne MC -- using 0 of 1750 limit, 24.4%

CreditOne Visa -- using 0 of 650 limit, 23.65%

Chase Slate using -- 0 of 1750 limit, 22.99%

Citi Double Cash: using 0 of 500 limit, 22.99%

Navy Federal Visa Platinum: using 9,163 of 10,000 limit, 15.99%
Bank of America Visa: using 1,062 of 1,100 limit, 14.99%
AmEx Blue: using 2,831 of 4,000 limit, 14.24%

Santander Sphere: using 4,373 of 5,000 limit, 13.73%

Mercury Mastercard: using 2,803 of 3,300 limit, 12.99%

Discover it Blue: using 11,777 of 12,500 limit, 12.99%

Wells Fargo Platinum: using 7,391 of 8,000 limit, 10.99%

Bank of America BankAmericard Rewards Visa Platinum Plus: using 13,665 of 15,500, 9.90%

Barclay Ring: using 6,350 of 6,750 limit, 8%

Citi Diamond Preferred (closed over 10 years ago because I had the option to keep the 5.24 APR and close the account, or keep the account open and the APR went up to triple or quadruple that): 1,142.15 balance (limit is 0 since it's closed), 5.24%

I also have:

a 6,500 loan through Lending Club that was paid off 10/2021

and

11/2021 I got an 8,000 loan through Upstart for 36 months, and I've made the 2 monthly payments so far. (so utilization on that is 7427 of 8,000).

Miraculously I was approved for that Upstart loan, which I used to pay off my highest-rate cards.

Around the time I paid off the Lending Club loan and got the Upstart loan, my TransUnion Fico Score 8 bumped from "Just under 'good'" where it had been hanging out for years, to "officially good" (like a solid 672).

My overall goals:

-increase my limits so my utilization goes down, and also, so I have elbow room if there's an emergency

-decrease my APRs

-be able to be approved for new credit

-and pay all this stuff down

Ideas on what would be a doable, smart next move?

I just got approved for a second Lending Club loan but the rate (19.94%) is higher than any of the credit cards I would use the loan to pay off, so it doesn't really make sense. It's also annoying because a few months ago when my scores weren't as high and my utilization was worse, they offered me a 15% rate.

Re: Seeking advice on building credit when utilization is high

CH-7-Mission-Accomplished — Sat, 26 Feb 2022 20:46:41 GMT

@Expansion wrote:
FinStar recommended I come over here and post.

I am looking to build my credit.

My utilization is high (85.6%) because of a very rough period a while back where I had to use my cards to cover my butt.

My credit has been established since 2001.

651 Equifax,
675 TransUnion,
not sure about my Experian.

I always pay on time. What's tanking my score is the high utilization.

Here's what I've got:
CreditOne MC -- using 0 of 1750 limit, 24.4%
CreditOne Visa -- using 0 of 650 limit, 23.65%
Chase Slate using -- 0 of 1750 limit, 22.99%
Citi Double Cash: using 0 of 500 limit, 22.99%

Navy Federal Visa Platinum: using 9,163 of 10,000 limit, 15.99%
Bank of America Visa: using 1,062 of 1,100 limit, 14.99%
AmEx Blue: using 2,831 of 4,000 limit, 14.24%
Santander Sphere: using 4,373 of 5,000 limit, 13.73%

Mercury Mastercard: using 2,803 of 3,300 limit, 12.99%
Discover it Blue: using 11,777 of 12,500 limit, 12.99%
Wells Fargo Platinum: using 7,391 of 8,000 limit, 10.99%
Bank of America BankAmericard Rewards Visa Platinum Plus: using 13,665 of 15,500, 9.90%

Barclay Ring: using 6,350 of 6,750 limit, 8%
Citi Diamond Preferred (closed over 10 years ago because I had the option to keep the 5.24 APR and close the account, or keep the account open and the APR went up to triple or quadruple that): 1,142.15 balance (limit is 0 since it's closed), 5.24%

I also have:
a 6,500 loan through Lending Club that was paid off 10/2021
and
11/2021 I got an 8,000 loan through Upstart for 36 months, and I've made the 2 monthly payments so far. (so utilization on that is 7427 of 8,000).

Miraculously I was approved for that Upstart loan, which I used to pay off my highest-rate cards.

Around the time I paid off the Lending Club loan and got the Upstart loan, my TransUnion Fico Score 8 bumped from "Just under 'good'" where it had been hanging out for years, to "officially good" (like a solid 672).

My overall goals:
-increase my limits so my utilization goes down, and also, so I have elbow room if there's an emergency
-decrease my APRs
-be able to be approved for new credit
-and pay all this stuff down

Ideas on what would be a doable, smart next move?

I just got approved for a second Lending Club loan but the rate (19.94%) is higher than any of the credit cards I would use the loan to pay off, so it doesn't really make sense. It's also annoying because a few months ago when my scores weren't as high and my utilization was worse, they offered me a 15% rate.

You are seriously well into bankruptcy territory. You owe a lot of money to a lot of people. You do not need to open up anything else -- even for "elbow room" should something come up. You are way past that point. Something has come up already. What is your monthly or annual gross income? Do you have any assets, like a house?

I know how this movie is likely going to end and if you have to pull the plug, you should do so sooner rather than later and not keep throwing good money after bad. Talk to a lawyer. The only goal on your list should be "pay all this stuff" off or get it discharged and start over. If you are eligible for a chapter 7, I would jump on that -- like Monday morning. You are in too deep and you still think your problem is lowering your APRs and getting more credit. Just stop.

Re: Seeking advice on building credit when utilization is high

Brian_Earl_Spilner — Sat, 26 Feb 2022 21:52:56 GMT

There's nothing to build. You already have a bunch of cards and loans. Only thing that's going to help your score is paying everything down.

Re: Seeking advice on building credit when utilization is high

Anonymalous — Sat, 26 Feb 2022 22:53:04 GMT

@Expansion wrote:
My overall goals:
-increase my limits so my utilization goes down, and also, so I have elbow room if there's an emergency
-decrease my APRs
-be able to be approved for new credit
-and pay all this stuff down

Ideas on what would be a doable, smart next move?

Your first 3 goals are unachievable. Lenders are going to look at that utilization, and run away screaming, even if you manage to increase your scores a little. In fact, expect to be balance chased. As you pay down the credit cards, there's a good chance they'll lower your limits. You're way past red flag territory. The only credit you should be considering is credit consolitation loans. Sounds like you've looked at a few fintech companies. Another option is a credit union, they might be more friendly. Or they may not, because that's seriously high utilization.

You really need to sit down and figure out what you owe, your cash flow, and what you can pay off. Looks like you owe about $60,000. How much do you make, and how much can you spend each month to pay it off? Cut everything non-essential. Considering moving to somewhere cheaper, or selling assets. From your APRs, it looks like you had pretty good credit, in the not so distant past. As a result of that, you're only paying about 12% in interest, overall. Which isn't bad, but it still amounts to about $8,000 just to service the interest, each year. You need to pay more than that to even start reducing what you owe.

From your credit limits, you probably have a reasonable income. So there's a good chance you can pull it off. But it's going to require serious belt-tightening, and discipline. To start, get all the cards above 90% down below 90%. Then pick one, and reduce it to 68% or so, then move to the next.

Re: Seeking advice on building credit when utilization is high

FinStar — Sat, 26 Feb 2022 23:55:11 GMT

@CH-7-Mission-Accomplished wrote:
@Expansion wrote:
FinStar recommended I come over here and post.

I am looking to build my credit.

My utilization is high (85.6%) because of a very rough period a while back where I had to use my cards to cover my butt.

My credit has been established since 2001.

651 Equifax,
675 TransUnion,
not sure about my Experian.

I always pay on time. What's tanking my score is the high utilization.

Here's what I've got:
CreditOne MC -- using 0 of 1750 limit, 24.4%
CreditOne Visa -- using 0 of 650 limit, 23.65%
Chase Slate using -- 0 of 1750 limit, 22.99%
Citi Double Cash: using 0 of 500 limit, 22.99%

Navy Federal Visa Platinum: using 9,163 of 10,000 limit, 15.99%
Bank of America Visa: using 1,062 of 1,100 limit, 14.99%
AmEx Blue: using 2,831 of 4,000 limit, 14.24%
Santander Sphere: using 4,373 of 5,000 limit, 13.73%

Mercury Mastercard: using 2,803 of 3,300 limit, 12.99%
Discover it Blue: using 11,777 of 12,500 limit, 12.99%
Wells Fargo Platinum: using 7,391 of 8,000 limit, 10.99%
Bank of America BankAmericard Rewards Visa Platinum Plus: using 13,665 of 15,500, 9.90%

Barclay Ring: using 6,350 of 6,750 limit, 8%
Citi Diamond Preferred (closed over 10 years ago because I had the option to keep the 5.24 APR and close the account, or keep the account open and the APR went up to triple or quadruple that): 1,142.15 balance (limit is 0 since it's closed), 5.24%

I also have:
a 6,500 loan through Lending Club that was paid off 10/2021
and
11/2021 I got an 8,000 loan through Upstart for 36 months, and I've made the 2 monthly payments so far. (so utilization on that is 7427 of 8,000).

Miraculously I was approved for that Upstart loan, which I used to pay off my highest-rate cards.

Around the time I paid off the Lending Club loan and got the Upstart loan, my TransUnion Fico Score 8 bumped from "Just under 'good'" where it had been hanging out for years, to "officially good" (like a solid 672).

My overall goals:
-increase my limits so my utilization goes down, and also, so I have elbow room if there's an emergency
-decrease my APRs
-be able to be approved for new credit
-and pay all this stuff down

Ideas on what would be a doable, smart next move?

I just got approved for a second Lending Club loan but the rate (19.94%) is higher than any of the credit cards I would use the loan to pay off, so it doesn't really make sense. It's also annoying because a few months ago when my scores weren't as high and my utilization was worse, they offered me a 15% rate.
You are seriously well into bankruptcy territory. You owe a lot of money to a lot of people. You do not need to open up anything else -- even for "elbow room" should something come up. You are way past that point. Something has come up already. What is your monthly or annual gross income? Do you have any assets, like a house?

I know how this movie is likely going to end and if you have to pull the plug, you should do so sooner rather than later and not keep throwing good money after bad. Talk to a lawyer. The only goal on your list should be "pay all this stuff" off or get it discharged and start over. If you are eligible for a chapter 7, I would jump on that -- like Monday morning. You are in too deep and you still think your problem is lowering your APRs and getting more credit. Just stop.

Let's get off our judgement high horse, please.

The OP shared their situation so the community can provide some guidance on getting the higher utilization under an ideal level, not be chastised over what they intend to do. If you can't provide any meaningful advice, then all this does is a disservice to everyone who posts here. BK is not for everyone and we've seen countless threads of members who were able to get things under control with the advice of very helpful individuals.

Offer solutions not doomsday scenarios @CH-7-Mission-Accomplished. If the OP was contemplating BK of any sort, that would have been mentioned above in their op or they would have posted in the BK section. We don't have to look very far to see testimonials from folks who overcame these issues.

Re: Seeking advice on building credit when utilization is high

FinStar — Sat, 26 Feb 2022 23:32:21 GMT

@Brian_Earl_Spilner wrote:
There's nothing to build. You already have a bunch of cards and loans. Only thing that's going to help your score is paying everything down.

The OP is simply looking for ways to get their utilization to an acceptable level so they can start building up their business credit profile. Maybe this isn't a Gucci moment for celebration, but at least the OP provided their information so that helpful members of the community could guide them with a viable strategy for chipping away at their debt.

Re: Seeking advice on building credit when utilization is high

Expansion — Sat, 26 Feb 2022 23:40:43 GMT

Hey FinStar, I really appreciate you stepping in here.

My situation is stable. My income is stable and growing. My business is full with a waitlist. I don't need credit right now. I'm in a position where I have the mental space and energy to work on this. I am not pursuing bankrupcy, that's not my path. Respect to those who do, but that's not where I'm at.

I would appreciate any suggestions.

Right now I am continuing to steadily pay things down.

Also, I am, over time, getting consolidation loans (first one through lending club paid off, second one through upstart just begun) to move utilization off the credit cards and also reduce the APRs.

Re: Seeking advice on building credit when utilization is high

Anonymalous — Sat, 26 Feb 2022 23:49:14 GMT

@Expansion wrote:
Hey FinStar, I really appreciate you stepping in here.

My situation is stable. My income is stable and growing. My business is full with a waitlist. I don't need credit right now. I'm in a position where I have the mental space and energy to work on this. I am not pursuing bankrupcy, that's not my path. Respect to those who do, but that's not where I'm at.

I would appreciate any suggestions.

Right now I am continuing to steadily pay things down.

I think everyone had good intentions. You didn't mention your business or that you were in good shape on the income front, and your post had a lot of warning signs. But I'll reiterate my suggestion to check with a credit union. Especially if you can provide proof of a solid and growing income, they might be very willing to extend you a loan. Beyond that, I'd suggest the avalanche over the snowball method. You really need to get the highest balances down, before you start paying off any completely.

One positive is once you have the utilization under control, your credit scores should bounce back.

Re: Seeking advice on building credit when utilization is high

Expansion — Sat, 26 Feb 2022 23:58:38 GMT

@Anonymalous, I went ahead and added that extra context to the original post so people can see it from the beginning.

Re: Seeking advice on building credit when utilization is high

Expansion — Sun, 27 Feb 2022 00:00:52 GMT

@Anonymalous "To start, get all the cards above 90% down below 90%. Then pick one, and reduce it to 68% or so, then move to the next."

thank you, this is helpful. I went ahead and ran all my numbers and there are only 5 cards over 90%. Three of them the extra amount needed to get it down to 89% is actually pretty small. This feels like a doable action!

Re: Seeking advice on building credit when utilization is high

Expansion — Sun, 27 Feb 2022 00:06:03 GMT

Just went ahead and paid two of the five cards still over 90% down to 89%.

Re: Seeking advice on building credit when utilization is high

Anonymalous — Sun, 27 Feb 2022 00:07:04 GMT

@Expansion, those are both great credit unions and a good place to start, but most credit unions are local. You'll have to look around your area. That's a big advantage, because you can talk to a real person, and explain your situation. While there are no guarantees they'll be able to offer you anything, they're going to be inherently more sympathic. CUs are structured very differently from banks, and their focus is more on serving their community than chasing profits. While that doesn't mean they're willing to just throw away money, they're often more generous to people who are struggling. In addition, it's more likely their decisions to extend credit will involve a personal touch not just an AI, and almost all of them make educating people on finance one of their priorities. When you're looking at local credit unions, don't let <company> in their name scare you away. Look at their membership criteria, because they're often open to anyone in the area, not just people affiliated with the company.

Re: Seeking advice on building credit when utilization is high

FinStar — Sun, 27 Feb 2022 00:18:25 GMT

@Expansion wrote:
Hey FinStar, I really appreciate you stepping in here.

My situation is stable. My income is stable and growing. My business is full with a waitlist. I don't need credit right now. I'm in a position where I have the mental space and energy to work on this. I am not pursuing bankrupcy, that's not my path. Respect to those who do, but that's not where I'm at.

I would appreciate any suggestions.

Right now I am continuing to steadily pay things down.

Also, I am, over time, getting consolidation loans (first one through lending club paid off, second one through upstart just begun) to move utilization off the credit cards and also reduce the APRs.

Because there have been times when I was approved for something unexpectedly -- lending club when I was in much worse position than I am now; upstart this past November -- I wanted to reach out to those who have a better sense of the terrain, if there are opportunities I might not be aware of that might be worth exploring.

Sure, anytime. Thanks for providing the additional information. I'm confident we can get some momentum to see you achieve your goals over time.

I'll tag some additional members who could perhaps drive this dialogue into a productive solution for you. @GApeachy is familiar with the business credit aspect of things so perhaps she can chime in here as well. Perhaps @tcbofade, @chiefone4u, @disdreamin, @thornback and others can help.

Re: Seeking advice on building credit when utilization is high

Expansion — Sun, 27 Feb 2022 00:18:16 GMT

thank you @FinStar ! I appreciate it!

Re: Seeking advice on how to improve credit when utilization is high

K-in-Boston — Sun, 27 Feb 2022 00:33:23 GMT

Kudos on your ability to maintain ontime payment history and your resolve to not pursue BK. I definitely uniquely understand the situation you're in, as I was in the same boat with around 90% overall utilization for years paying around $5k a month in interest and getting nowhere until I got the dual lifelines in 2015 of NASA FCU giving me two offers that helped me completely rearrange my debt and finding these forums. Fortunately, one advantage you have now that I didn't have in 2007/2008 is universal default is no longer a thing so your cards have not all been rate jacked to the mid-20% range. And unfortunately, the one thing that will likely enter the picture for you as these are paid down that hurt me so much is balance chasing.

To finish up your FICO 8 baselines, your Amex account gives you a monthly Experian 8 score (it's buried since they began offering credit monitoring services using TU VantageScore 3.0, but navigate to: Account Services, Profile, View FICO Score). You can also obtain one for free once a month courtesy of Discover at creditscorecard.com

You've already stated that you paid down some of the cards below 90% since I began typing this, and that is a good place to start. Anything reporting over 89% (you'll need to allow for some interest reporting with statement close as well) is definitely an additional score killer. I would absolutely start with looking at credit unions that offer either low APR loans or credit cards with good balance transfer offers to shift some of the balances. When you have income to support the debt and an otherwise clean score history, credit unions can be far more lenient with existing high utilization.

Speaking of utilization, you mentioned that your Citi Diamond Preferred card has a $0 limit - is it actually reporting a $0 limit on your credit reports, or do you just mean that it has $0 limit because it's closed? That is a very important distinction. If it is actually reporting $0 but has a balance, that should be prioritized to be paid off because it's being essentially factored as 100% utilization until it reaches a $0 balance. If it is still reporting a credit limit, however, it's being factored just as your open cards are and with its very low APR I would probably take my sweet time paying it off.

Next, I would focus on freeing up existing cards that may have balance transfer offers. The more balances you can shift to 0% or very low APR balances, the more you can free up each month to throw additional money toward the ones you can't yet shift. Your Navy Federal, Discover, and Bank of America cards are the most likely options here.

Don't get discouraged when (not if) some of your lenders decide to balance chase you. That can always be undone when your utilization is back under control, and do not take it personally when it happens. You'd be hesitant to loan even your best friend more money if they owed you a ton and are taking their sweet time paying your back, after all. It's just risk mitigation and despite your payment history, you're a very high risk on paper right now.

Also, while that loan may be a little higher in APR than your other cards, it also forces you to actually make those payments to get the balances down, gives you a scoring boost by having an open installment loan account, and also helps to reduce the amount of debt in the revolving column.

As your balances come down and your utilization in turn goes down, your scores will climb right back up. Just make sure you continue to have 100% positive payment history reporting and it will be like this never happened.

Edit: Also, not something I recommend to someone drowning with no way out, but since your income seems to be something you don't expect to diminish, do you have home equity you might be able to leverage? That could be a one-and-done with your current balances.

Re: Seeking advice on how to improve credit when utilization is high

tcbofade — Sun, 27 Feb 2022 00:50:06 GMT

Once those five accounts report to the CRAs with less than 89% utilization, you should see a noticeable score increase.

I've been playing the balance transfer game for a few years and I am not done, but can see a light at the end of the tunnel....

Once your Fico 8 scores hit 680 or so, the zero percent balance transfer offers should start to arrive.

A second navy platinum card would come with a 12 month zero percent transfer offer with no fee.

A PenFed card would come with a 12 month zero percent offer WITH a fee.

There is a world of options out there, and this is very doable!

Re: Seeking advice on how to improve credit when utilization is high

Expansion — Sun, 27 Feb 2022 01:15:59 GMT

@K-in-Boston Thank you so much for your insight and specific suggestions! It means a lot, especially since you have been through what I'm going through, and you are on the other side.

I took notes on what you said

1. Good news! My Experian 8 is 680!! "GOOD"! I didn't realize I could get it through AmEx. Thank you for the specific instructions!

2. With the Citi Diamond Preferred, here's what it looks like in my account:

Since it says "Available credit $0.00," it sounds like that means I should prioritize paying this off (since it's currently 100% utilization no matter what the balance is)? Do I have that right?

(Also, I checked my statement and it doesn't list any limit on the statement.)

And then after I take care of the Citi Diamond Preferred, move on to getting the others under 90%?

THANK YOU!

Re: Seeking advice on how to improve credit when utilization is high

K-in-Boston — Sun, 27 Feb 2022 01:07:57 GMT

You are very welcome and this is something it seems like you can get through. Like tcbofade, I am not quite out yet and still have what most would consider a shocking amount left, but it is far less than it was in 2015 and it's steadily coming down with very little interest paid rather than stagnating.

Your scores seem easily recoverable as the debt comes down as well. And it may not even be that much to get around 700.

For the Citi card the important thing will be how it is reporting to the credit bureaus rather than on your statements. It is showing $0 in your Citi account because you have $0 available to spend. annualcreditreport.com for all 3, or Credit Karma for TU and EQ reports (ignore the VantageScore 3.0 scores) would be easy places to take a look. What you want to see is whether it is reporting $0 for your credit limit or not there.

Re: Seeking advice on how to improve credit when utilization is high

Expansion — Sun, 27 Feb 2022 01:07:19 GMT

@tcbofade Thank you so much for your insights and suggestions! This is exactly the kind of feedback I need. I took notes!

And also exciting that one of my FICOS (Experian) is already 680! TransUnion is close (672/675), Equifax the farthest to go (651).

Thank you for saying this is doable and also that there are lots of options.

Re: Seeking advice on how to improve credit when utilization is high

K-in-Boston — Sun, 27 Feb 2022 01:15:20 GMT

@Expansion another thing I forgot to mention is that if you are currently putting daily expenses on a card that has a balance that is being carried, stop if at all possible. Either pay cash (that is a painful statement for me to make, rewards and all) or free up one card to use for those that you can commit to paying in full each and every month. When you carry a balance, there is no grace period. Even on rewards cards, you will usually end up paying more for new purchases than the rewards would net you back because they accrue interest immediately.