Utilization question

[Anonymous]

We have applied for a mortgage.  We are going with USDA loan and needed mid score of 640.  DH had a 644 and I had a 639.  Woke to an alert on equifax score watch on Christmas that I got three points and a one point increase today which puts me over the mid score.  This past week logged onto capital one to make sure payment posted on my $300 credit card to find out I had a $3000 CLI!  I only have the one card and now the balance is $54.  I am authorized user on my husbands other cards which are at a higher utilization.  Right now overall I am at 18% utilization.  We are continuing to pay down UTI on his cards.  Should I let mine go to zero or keep it between 1-9%?  Our scores are so close so I don't want to lose any points.

[takeshi74]

Advice for optimal utilization is allow only one balance to report at 10% or less.  Do not allow your utilization to reach 0 as there is a hit for 0 utilization.

[Anonymous]

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@Anonymous wrote:

We have applied for a mortgage.  We are going with USDA loan and needed mid score of 640.  DH had a 644 and I had a 639.  Woke to an alert on equifax score watch on Christmas that I got three points and a one point increase today which puts me over the mid score.  This past week logged onto capital one to make sure payment posted on my $300 credit card to find out I had a $3000 CLI!  I only have the one card and now the balance is $54.  I am authorized user on my husbands other cards which are at a higher utilization.  Right now overall I am at 18% utilization.  We are continuing to pay down UTI on his cards.  Should I let mine go to zero or keep it between 1-9%?  Our scores are so close so I don't want to lose any points.

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I'm not sure whether AU cards are counted for the all-but-one-at-0% strategy. If you need 640, I think that the risk is too high for you to consider trying to pay it off, regardless of the potential benefit. I would keep your card at 1-9% utilization and paid in full every month, and continue to pay down DH's cards in decreasing order of interest rate. 

[Anonymous]

So for a $3300 credit line use about 1-9% of it??glut it post to statement and he pay it off?  Repeat?

[Anonymous]

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@Anonymous wrote:

So for a $3300 credit line use about 1-9% of it??glut it post to statement and he pay it off?  Repeat?

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Sounds right. You want more than $1 but less than ~$300 on your statement when it cuts. You then pay the $300 before the payment date. I suppose, as a general rule, you want to keep it under $300 at any given point of time, so if you spend $150ish per month, you can auto pay and it won't ever be an issue. 

[NRB525]

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@Anonymous wrote:

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@Anonymous wrote:

So for a $3300 credit line use about 1-9% of it??glut it post to statement and he pay it off?  Repeat?

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Sounds right. You want more than $1 but less than ~$300 on your statement when it cuts. You then pay the $300 before the payment date. I suppose, as a general rule, you want to keep it under $300 at any given point of time, so if you spend $150ish per month, you can auto pay and it won't ever be an issue. 

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I would say, since your CL increased to $3,300 (congratulations BTW) that you now have a new minimum, you want at least $50 to report each month so you are comfortably over that 1% minimum.

[Anonymous]

Thanks everyone.  Also going to run it by the mortgage lender to see what she recommends.  I was totally surprised about the credit line increase and now we are finally approved for mortgage.  As soon as the realtor is back in town we are making an offer on the piece of land and then we begin finalizing floor pans for our house to be built!

[gdale6]

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@Anonymous wrote:

Thanks everyone.  Also going to run it by the mortgage lender to see what she recommends.  I was totally surprised about the credit line increase and now we are finally approved for mortgage.  As soon as the realtor is back in town we are making an offer on the piece of land and then we begin finalizing floor pans for our house to be built!

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I would not take the mortgage lenders word for anything concerning the best way to maintain your credit most of them are blind and have no idea how Fico scoring works, I would suggest you run any suggestions by the knowledagble people here on the board before you implement any actions they may recommend. Good luck on getting your new home

[MarineVietVet]

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@NRB525 wrote:

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I would say, since your CL increased to $3,300 (congratulations BTW) that you now have a new minimum, you want at least $50 to report each month so you are comfortably over that 1% minimum.

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Utilization is always rounded up for scoring so even $1 will report and be scored as 1% utilization.

[NRB525]

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@MarineVietVet wrote:

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@NRB525 wrote:

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I would say, since your CL increased to $3,300 (congratulations BTW) that you now have a new minimum, you want at least $50 to report each month so you are comfortably over that 1% minimum.

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Utilization is always rounded up for scoring so even $1 will report and be scored as 1% utilization.

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I don't disagree, but given some of the random short term score declines we've seen on the "Understanding FICO" threads, why push the amount down that low? The $50 keeps it a consistent value so the FICO doesn't get blown out by some trigger that the OP would rather not deal with right now.