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

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Dishpro
Regular Contributor

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

Has anybody figured out how a balance on an American Express account effects your scores. I have read the thread on this forum but what actually happened to me was very interesting. We all know that the way FICO works is sort of a mystery at least for me. My scores jumped from 710 to 735 (EQ) without any apparent reason except for the fact that that reporting month I have reduced my Amex balance from the usual 3-4k to less than 1k. And my CC UT is over 55%. with 2 cards in the high 70 %. I will over the next couple of months pay off my entire rev balances to zero. But I have looked over my reports and compared the last few months and the only difference is the amex balance reduction.

 

Starting Score:
585
Current Score: FICO TU 725 FICO EQ 735 EX 754
Goal Score: 850


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Message 31 of 44
crawdiddly1
New Visitor

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

Believe me as I am going through the same thing. I started with a Fico of 722, and it seems every move I make darkens the score. I am at a 715 at last check. Everything I read says Pay them off to a near zero balance and keep them open. Theory being it has such an impact of percent of credit available versus

credit utilization. I guess we'll see as I have figured a way to pay off or rather near pay off all but about 3 of them and keep a small balance on those. Shop carefully for a consolidation range ensuring that you are getting the best interest rate on what you keep, as well as the loan you're getting. Go by the numbers, and don't accept the big boys offer just because they are the big boys.


@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!



@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!


Message 32 of 44
SCH
New Visitor
New Visitor

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

Hello! If you are working to improve your score the rule is keep all balances between 1 and 19% of your available credit for that card. It actually is better to have at least 1% on a card than to have a zero balance. This method worked for me and within a couple months I increased my score by 30 pts. Good luck!!
Message 33 of 44
lgs33
New Visitor

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

Hi, Megaman.  Now that's what I call a mega-helpful answer.  I wish we could all be as intelligent as you, as courteous as you, and as perfect as you.  Then we could ALL have our head up our _ss...just like you!

Message 34 of 44
RoGhost
New Visitor

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

Your not playing by those who live in glass houses rule!! LOL Ignorance and belittling won't solve your own issues if that's what you hoped to achieve through your negative response!! Fixing your credit won't fix that little man who looks back at you in the mirror!!
Message 35 of 44
Darlin23
New Visitor

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

I am told to keep credit cards to 35% of their maximum so would be better to try and pay them all down. Perhaps focus on paying down or paying off one at the time choosing the highest interest rate to pay first
Message 36 of 44
titanofold
Established Contributor

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


@Dishpro wrote:

Has anybody figured out how a balance on an American Express account effects your scores. I have read the thread on this forum but what actually happened to me was very interesting. We all know that the way FICO works is sort of a mystery at least for me. My scores jumped from 710 to 735 (EQ) without any apparent reason except for the fact that that reporting month I have reduced my Amex balance from the usual 3-4k to less than 1k. And my CC UT is over 55%. with 2 cards in the high 70 %. I will over the next couple of months pay off my entire rev balances to zero. But I have looked over my reports and compared the last few months and the only difference is the amex balance reduction.


For an Amex charge card, it does not factor into your utilization with recent scoring models, but it does factor into your DTI. If you have an Amex revolver, then it's subject to the same terms as any other CC.

Scores2013-09-21Current
Equifax630 (LP)755 (CK)/749 (Quizzle)
Experian640 (FCR)FICO 707 (Amex)
TransUnion588 (CK)FICO 754 (Barclaycard)
Message 37 of 44
titanofold
Established Contributor

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


@Alberio wrote:

Thank you for all of the very helpful responses.  I have had each of these cards in good standing for a decade or more.  I don't want to ask for a CLI or get another card even though (at least with a CLI) I think I would get what I am asking for, because I am in the mortgage process and don't want any HPs on my record or new accounts opened. 

 

....

 

Anyway, thanks again for all of the guidance.  It is invaluable.


Which CCs do you have? Several CCC you can ask for a CLI and it will be a soft pull instead of a hard pull. No lender will see a SP. You can also ask if you're eligible for a CLI with companies that do HPs, just don't authorize them to pull your CRs.

Scores2013-09-21Current
Equifax630 (LP)755 (CK)/749 (Quizzle)
Experian640 (FCR)FICO 707 (Amex)
TransUnion588 (CK)FICO 754 (Barclaycard)
Message 38 of 44
mrgoattoo
New Contributor

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


@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!


I have 9 cards and the wife has 6 or 7. Ive used CC's alone to get to my current FICO (late model) of 797, so it is possible to get a decent credit score using just credit cards. The things Ive noticed over the years is the way to get a high score using them is to make the CC company think you dont need them or their card. That youre just using them as a convenience and you could drop them anytime without a problem to your finances. What this means is not carrying balances on any card for long and to be paying down your balances seriously fast. When I have carried higher balances I shift it around a lot by making large payments on one card and using another for that month. I almost always have at least some balance on at least two cards, sometimes 3 or 4 cards because we use our cards to make ALL purchases during a month and then make payments or pay them off end of month.

 

In the end as long as you arent maxing out any card I dont think Ive noticed any issue with having a large amount on one card as opposed to spreading it out over 4 or 5 cards. The TOTAL utilization compared to your TOTAL available credit of ALL of your cards combined seems to be the main factor, at least from my observations over the years. When I borrowed money (a low interest 'balance transfer thru my citibank CC) to buy a used car, my score dropped slightly. When I moved that balance around to multiple cards it had zero effect on my credit scores. The score only started raising as I was paying my TOTAL debt down.

 

Obviously this is just my case here, but if FICO scores are all figured equally for all, then I'd say the issue isnt whether the debt is on one card or ten, but really about the amount you owe versus the amount of total credit available. This is regarding your FICO score, however, the individual lender themselves may panic if you have a maxed out card regardless of your overall situation.

 

Id be very careful not to give the lenders the impression that you are only shifting balances around without actually paying them down gradually. A few minimum payments and not paying down the total debt a little each month will send a big red flare off and you may find that they lower your credit limits. At the very least carrying that kind of overall debt is going to keep your score low because in the lenders eyes right now you NEED that credit...which means you are a higher risk to them than someone who doesnt need them.

TU FICO average 819
Message 39 of 44
Dinka381
New Visitor

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

From what i have read an doing. It is best to try to keep your utility under 30%. That means all your cards combined. Add up you total credit limit for each card all together and subtract the total amount you owe. Again you want to keep your combine total of all cards under 30%.
Hope this helps
Message 40 of 44
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