Utilization - Better to Load Up on Few or Spread it Out to All CC??

[Alberio]

I have four credit cards - all of which I have had for at least ten years.  I utilize just over 60% of my credit.  I know that is high and I am working to reduce it.  In the meantime, assuming I need to carry that much debt for now, is it better for my credit score to spread the utilization across all the cards, or is it better for my credit score to pay off two cards (carry $0 balance) and come close to the limits on the other two?

Thanks!

[Anonymous]

Let's say that if you were doing things right, you're score wouldn't be as low as it is now.

[Kenny]

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@Anonymous wrote:

Let's say that if you were doing things right, you're score wouldn't be as low as it is now.

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Not very nice. I would hope that you would add constructive answers to the OP's question. They are at least trying to find out the correct way to do things in the mean time until they are able to pay off the debt.

I'm not entirely sure OP, I know you don't want to appear maxed to the lender, however your utilization is based on all of the cards. I do know that your Fico takes into effect (or at least I think I know) the number of accounts reflecting balances so it would be ideal, as well, to not have many with balances. 

I hope someone who knows more about this subject will come along and help us all out with this question.

GL OP -- stay strong and wishing you continued success.

[Alberio]

"Let's say that if you were doing things right, you're score wouldn't be as low as it is now. "

Okay, yes.  Granted.  That was a useless and non-constructive response. 

Setting that snark aside, while I work to get my util in line (and I have done a lot and have seen a 20 point increase), I also want to take short term actions to maximize my score for a mortgage application.

So, setting aside that I am at fault for my score sucking, can anyone tell me which is the smarter move to increase credit score - spread out the debt over multiple CCs or put it all in one place? 

[Swapmeet]

You definitely do not want to max out (90% util or more) any one card. Maxing out cards definitely lowers your score, no matter what your total util is.

[Anonymous]

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@Alberio wrote:

I have four credit cards - all of which I have had for at least ten years.  I utilize just over 60% of my credit.  I know that is high and I am working to reduce it.  In the meantime, assuming I need to carry that much debt for now, is it better for my credit score to spread the utilization across all the cards, or is it better for my credit score to pay off two cards (carry $0 balance) and come close to the limits on the other two?

Thanks!

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FICO scoring looks at overall utilization, utilization per card, and proportion of cards with balances.

I'm not sure of the tradeoff between the last two, which is really what you're asking.  There's also the notion of maxing a card, and I think the threshold is either 80% or 90%.  There's also the consideration of AA risk from other lenders.

If it was me, I'd probably spread things out, and not max any card.

Another approach would be to try to get an installment loan, and clear out all the balances.  Moving revolving debt to installment is usually a major win.

[notfancy]

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@Alberio wrote:

I have four credit cards - all of which I have had for at least ten years.  I utilize just over 60% of my credit.  I know that is high and I am working to reduce it.  In the meantime, assuming I need to carry that much debt for now, is it better for my credit score to spread the utilization across all the cards, or is it better for my credit score to pay off two cards (carry $0 balance) and come close to the limits on the other two?

Thanks!

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In general it's better to carry a balance on as few cards as possible. FICO seems to like seeing most accounts at 0 balance. However, like others have said you don't want that one card that is carrying  a balance to hit 90% or more or it will be considered "maxed" which is another ding.

Can you get them paid down as much as possible then call and ask for credit limit increases?

[myjourney]

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@Alberio wrote:

I have four credit cards - all of which I have had for at least ten years.  I utilize just over 60% of my credit.  I know that is high and I am working to reduce it.  In the meantime, assuming I need to carry that much debt for now, is it better for my credit score to spread the utilization across all the cards, or is it better for my credit score to pay off two cards (carry $0 balance) and come close to the limits on the other two?

Thanks!

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With high UTL don't worry about scores until CC's are paid down

To answer your question spread them out amoung all cards in your case

And I'll tell you why.

Fico scoring looks at UTL 2 ways

Any cards over 70% will be considered maxed out resulting in a scoring ding

Any UTL over 30% will be also see a scoring ding doesn't matter if it's one card or 4

For max scoring 1 card should be 1-9% all others should be paid in full $0

The good news is Fico scoring for UTL has no memory so each month you lower UTL you should see an increase in scores 

Hope this makes sense

[myjourney]

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@Anonymous wrote:

Let's say that if you were doing things right, you're score wouldn't be as low as it is now.

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[gdale6]

For the moment keep the spread out but make the most payments on the highest int rate card, then the next highest int card and so on. Good luck.

Adding another card or two is likely to raise your score as well, so when you come below 40% overall util I would pull the trigger.