Long term effects on high utilization of CCs

[Anonymous]

Hi everyone, have a question I need assistance on.

i have three credit cards all with a limit of 1500.  They are all maxed and a few bucks over.  I have had these cards for roughly three years.  Over the past two years my score has dropped almost 150 points.

lets say right now I have the cash to pay them all down to 5% total utilization.  Will my credit rebound for the next statement?

what are the long term affects of high utilization?

[lord_kinbote]

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@Anonymous wrote:

Hi everyone, have a question I need assistance on.

i have three credit cards all with a limit of 1500.  They are all maxed and a few bucks over.  I have had these cards for roughly three years.  Over the past two years my score has dropped almost 150 points.

lets say right now I have the cash to pay them all down to 5% total utilization.  Will my credit rebound for the next statement?

what are the long term affects of high utilization?

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FICO has no memory in regards to utilization.  Pay the balances down and your scores will climb.

[longtimelurker]

As often stated here, utilization is a snapshot, and so once lower utilization is shown on the reports (everything else being equal) the score goes back up.

Hence the often-ignored advice to only worry about  micro-management of utilization (PIF before statement cuts on all but one card) when you are about to apply for something

Now that is FICO.  Issuers will have their own internal scores and might (we don't know) take into account balances carried over tiime on their own card(s), but are probably more concerned with how much you spent with them and payment history.

[Anonymous]

I, like you, and a newbie to this world of credit management so hopefully someone with more experience will chime in. My two cents: high utilization, from what I understand, will definitely hurt your credit in the long run. However, should you pay it down substaintially, it would be a great excuse when asking for a CLI, pleading your case that you need a higher limit based upon your usage. Ultimately, I think less than 10% (maybe around 5-8%?) utilization would be ideal. Regardless, I think it would be best to pay it down if you have the money to do so. 

[BarryNTexas]

A little over a year ago I had let most of my cards carry max balance.  One step I took immediately was pay them off and my scores jumped 80 points on average.  That alone gave me hope to address the rest of the issues on my credit files.

I say pay them down and you will see score uplifts.

The longterm affect on your scores is really all about you and how you decide to leverage credit going forward.  Good Luck!

[bdhu2001]

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@Anonymous wrote:

Hi everyone, have a question I need assistance on.

i have three credit cards all with a limit of 1500.  They are all maxed and a few bucks over.  I have had these cards for roughly three years.  Over the past two years my score has dropped almost 150 points.

lets say right now I have the cash to pay them all down to 5% total utilization.  Will my credit rebound for the next statement?

what are the long term affects of high utilization?

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Although utilization has no memory, the few bucks over may. It's like being overdrawn on your checking account; that shows up.  If it's only a few bucks it not have long-term impact, but I would pay down the CCs and keep them below 9% utilization.  If possible and have all cards, but one, at zero and one card 15% or less.  Check your CBA report dates on each cards so that you know when all of them need to be paid down for your FICO score to change.

[gdale6]

The long term effects of high utilization are a lower scoring bucket in the Fico system. You can pay down to 5% and you will recover points but you wont get all you can possibly get right then and there as you have to stay in that area for awhile before Fico will kick you up into a higher scoring bucket, in other words you need to prove you can maintain a lower util before you get the full reward. It can take a few months to over 6 for this to happen its different for everyone. Good rule of thumb is to always keep your revolving card utilization on the low side (less than 30%).. Good luck in your credit journey and welcome to the MF board

[Anonymous]

It will decrease will the balances are high, but as soon as they are paid they will jump back up. 

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@Anonymous wrote:

Hi everyone, have a question I need assistance on.

i have three credit cards all with a limit of 1500.  They are all maxed and a few bucks over.  I have had these cards for roughly three years.  Over the past two years my score has dropped almost 150 points.

lets say right now I have the cash to pay them all down to 5% total utilization.  Will my credit rebound for the next statement?

what are the long term affects of high utilization?

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[Chris679]

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@gdale6 wrote:

The long term effects of high utilization are a lower scoring bucket in the Fico system. You can pay down to 5% and you will recover points but you wont get all you can possibly get right then and there as you have to stay in that area for awhile before Fico will kick you up into a higher scoring bucket, in other words you need to prove you can maintain a lower util before you get the full reward. It can take a few months to over 6 for this to happen its different for everyone. Good rule of thumb is to always keep your revolving card utilization on the low side (less than 30%).. Good luck in your credit journey and welcome to the MF board

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Wher is this info coming from? I have never heard of this before and it is not generally accepted to be the case.