Paying balances to 0 - how much does it help?

[wvasweetness]

We paid all of our cards off yesterday... and I'm wondering how much it's going to help our scores.
I mean... besides that fact that we're CC debt free (woo hoo!), I'm curious to see how much of a difference it will make? We owed on 5 cards... the balances were $224 ($500 limit), $289 ($500 limit), $490 ($750 limit), $801 ($1000 limit), and $1011 ($1300 limit).
They are all paid to 0, but I'm wondering how much of a "boost" this will give our scores us since the credit limits aren't that high?

Message Edited by wvasweetness on 02-14-2008 12:11 PM

[cobra19]

nice work, sweetness. I don't think anyone can give you a number increase you can expect - but you should realize a rather significant bump.

Actually, with 5 cards I think you'd see more of a bump if you left a small (1-3%) balance on 2 or 3 of them. For reasons unknown, FICO likes to see small balances.

[wvasweetness]

Hmm... interesting.

I wonder if it would be more beneficial to have the 1-2% balances on one of the cards with a higher limit, or one of the cards with the lower limit? Or would it matter??

[cobra19]

doesn't matter. FICO factors your overall utility as well as card utility.

[Anonymous]

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wvasweetness wrote:
Hmm... interesting.

I wonder if it would be more beneficial to have the 1-2% balances on one of the cards with a higher limit, or one of the cards with the lower limit? Or would it matter??

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It doesn't matter, since you're talking in percentages.  1-2% of a higher CL will be a higher $$ amount, but it's still 1-2%.

[haulingthescoreup]

With my scores, I do best if one out of my five cards has a balance. Doesn't matter which one, just one. Naturally, it can be different with others.

It makes your life simpler if you have the balance on the higher limit card, because you have more wiggle room. I usually have under 1%, with an occasional exciting util of 2%.

The idea is that you are showing that you can flirt with credit (low usage) without, umm, going all the way. Sort of an archaic concept, but familiar to Southern females over the age of 50.