CC util FICO thresholds?

Anonymous · ‎10-21-2009

Hi everyone,

I know (I think?) that the "ideal" situation situation for optimum scoring is to have one credit card reporting 1-9% util and all others reporting zero, but active. We are not even close to that point yet, but we are making progress. I need a little more info about intermediate steps between where we are now and that ideal state.

I know that maxing an individual card is bad, but is 90% or greater the value to avoid at all costs? are there intermediate levels between the 9% and 90% to hit a threshold, or new tier?

For some reason, I have in my head 1-9%, 10-29%, 30-59%, 60-89%, 90% and above... but I may just be making those up subconsciously so that I can set manageable goals for short term motivation.

We just got RJ'd by Citi the first time we started carrying a balance on that card ($3500 of 11.3k CL). We have been opening all sorts of new accounts with CUs to avoid the big banks, and our AAoA has suffered significantly, so we may face more AA because of it. However, we have a decent amount of credit available now and we are trying to split up the debt in such a way that the negative affects of the lower AAoA are lessened.

Right now, we have:

Citi diamond 3.5k/11.3k RJ'd

PenFed 8.8k/10k 2.99% BT

PenFed 2.6k/3k 2.99% BT

Citi Select 8k/9k 0% till Feb

360FCU 7.5k/10k 1.8% till Jan

Discover 0.6k/7.5k 0% till August

Alliant 0.5k/2k

Alliant 0.6k/2k

Household 0.25k/2k

GEMB Amazon 40/800

I just got my new NFCU 14k 12.9% card with no BT fees. As much as I would hate to voluntarily put a balance on a 12.9% card by choice, it may be better than other options.

I have a 10k BoA Worldpoints Plat Plus card that I am an AU on but I am the only actual user of it. I hate BoA and never want to use it again, but I still have a 1.3k balance on it at 20% (cash advance). New purchases and BTs are 11.24% +4% fee, but BoA could CLD, RJ etc anytime they want and I don't want to draw attention to the account unneccesarily.

Also in the SD:

Crap1 0/3k 17.99%

Juniper 0/1.5k 14.99%

Merrick 0/1.2k 27.99% (?!?!)

I also opened share/checking accounts at USAA and US Bank to prep for the next round of apps when we get our scores back up so we can start dropping the sub-prime and BoA/citi accounts... but I think now is too soon to app for them.

Given the current debt distribution, what do you think the optimal plan would be for getting Citi Diamond paid off, BoA cash advance paid off, and keep our overall and individual utilization at the best we can manage?

Is that 30% threshold real, or is everything basically just linear (negatively, of course) between 10% and 90%?

We obviously don't want to touch the PenFed BTs as they are good for life. We are just paying 2-3x the minimum each month to stay in good graces.

360FCU 1.8% expires in January and goes to 12.25%, so we put in for a $5,750 BT from Discover to 360, so Discover is effectively at $6600/7500 including BT fee...

We have roughly $1k per month dedicated to paying down this debt, and we will have approximately $4k-$5k as a tax return dedicated to a lump sum payment in March.

Thanks in advance! Don't know what I would do without the help of this forum over the last few years... 490 FICO 1/05 to just under 700 now, but looking to buy a house next year!

-Justin

Anonymous · ‎10-21-2009

I just BT'd my Citi balance to an NFCU card. Nice thing about NFCU is there are no balance transfer fees, it is treated as a cash advance (accumulates interest from day 1 with no grace) but it is much better than even one month of interest at 29.99 ( I did the math, knowing when I could clear the entire thing).

Talked to several reps before I did this and they were 'appalled' that it was happening (realize, they are seeing my accounts with them as we speak). They will probably have heard it already from another member so no one is surprised. In fact Citi did it to the one rep I spoke with.

Another thing - NFCU is capping their rates at 17.9 (that is the worst case scenario) - still beats 29.99 by a long shot.

Personally I would BT both BofA and CCiti to NFCU - accept the new terms from CITI and keep the account open and SD the card along with the Bof A. If they start putting annual fees on them then that is another matter ( which is probably the next plan).

Message Edited by Lady_Scarlet on 10-21-2009 12:34 PM

Anonymous · ‎10-21-2009

I think that is what we are going to do.. probably put BoA on there as well and clear out Household...

Any idea about the util % thresholds for scoring?

Thanks,

-Justin

creditwherecreditisdue · ‎10-21-2009

Optimal credit utilization for FICO scoring purposes is:

Total revolving utilization > 0 and <= 9%, the lower the better, and
Reporting a balance on less than half of your revolving TL's, and
Reporting a balance on half or less of all TL's.

Anyway you get there is fair game. You only need have one revolving TL report a balance.

That said you have too many balances and too high balances. Pay some of those smaller balances off to $0 and keep them there. Then start paying like a madman until you get your total UTIL under 35%, then your individual card UTIL's under 35% and then keep going. Don't worry too much about the intermediate steps - they are there, but it really doesn't matter. You have to get those balances down now!

marty56 · ‎10-22-2009

The best way to determine your threshold is to start with a good baseline. 0% util. You then can experiment by allowing a single card to report a small balance and see what effect that has. For me, TU likes 0% and EQ doesn't but the 3 point ding by EQ isnt worth allowing a balance to report.

It goes without saying that allowing a balance to report is not the same as revolving a balance, which these days is a bad idea on everything but a store card at 0%.

Once you are out of CC debt, you can control how much and how many cards report and see where your own sweet spot is.

1/25/2021: FICO 850 EQ 848 TU 847 EX

Anonymous · ‎10-22-2009

Thanks for all the feedback. As you can see, we are far from being able to manage to report a $0 balance, though that is the long-term goal (within 18 months). We made some bad decisions but luckily we set ourselves straight and made it the highest priority for us.

We are just trying to figure out the path to 0, making the fewest mistakes along the way!

Anonymous · ‎10-22-2009

@Anonymous wrote:

We have roughly $1k per month dedicated to paying down this debt, and we will have approximately $4k-$5k as a tax return dedicated to a lump sum payment in March.

Such a large tax refund suggests that your withholding is greater than it should be. Free up money now by filing a new W4 to reduce your withholding, & then apply that extra cash to your CC balances. Don't wait another 4 to 5 months.

You're lending the government money at 0% interest while paying double-digit rates to your creditors. That spread doesn't work to your advantage.

(FWIW, I try to manage my withholding so that I get back nothing when I file my return, although I don't mind having to pay a few hundred.)

Anonymous · ‎10-22-2009

The "threshholds" that I have noticed differences (in score) are:

70%

50%

35%

30%

20%

11%

9%

7%

0% (resulting in a few point loss)

Of course these percentages are also affected by the number of balances resulting in that percentage and in specific cards potentially being maxed or close to maxed out (individual percentages vs. overall percentages).

Therefore, the snowball (low balance card) pay off plan can result in quicker score gains because you reduce the number of accounts more quickly while you pay the overall percentages down. This may result in a bit more interest though because your low balance cards may not be your highest APR.

creditwherecreditisdue · ‎10-22-2009

I am a big fan of the low balance snowball debt repayment plan if you are looking to maximize your FICO scores. It worked incredibly well for me. (I also did not have huge balances or many balances, but differing APR's was a factor. It did cost me a little bit in additional finance charges to implement but it was very worth it!)

creditwherecreditisdue · ‎10-22-2009

txjohn wrote:
The "threshholds" that I have noticed differences (in score) are:

70%
50%
35%
30%
20%
11%
9%
7%
0% (resulting in a few point loss)

I think these thresholds are relevant.

The improvement may be more or less continuous once you get below 35%. Every 1% may matter once you are below 15%. Another factor that may be significant is whether you are scored in a clean or dirty scoring bucket.