Optimizing Credit Utilization: Building Credit Score by Demonstrating Card Usage and Full Repayment

[MySunrise271]

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@msmjj01 wrote:

Sorry for the confusion.

Out of a total credit card debt of $200k, around $60k is outstanding. All balances are being paid off monthly on time, with no missed payments or derogatory marks. However, my credit score is currently low due to the high balances.

My monthly spending across all cards is $60-70k, which I pay in full exactly three weeks after each charge is made, even before the statement closes. So, despite paying off the $70k monthly, there is still a large remaining balance. This balance came from a loan I took out through a Citi card and a balance transfer offer, which I maxed out for a family member's surgery and treatments. I'm wondering if paying in full like this has any positive impact.

Most medical bills can be put on a payment plan through the hopsiptial and or provider.  They also have financial hardship programs you may be qualified for. This generally much better option to try first rather than using a credit card.  That said, it's also ideal to use only one offer for one event at one time on a Citi credit card (or other lender). This keeps the interest terms simple to keep up with, as each offer will have a different term and they will compound on each other if multiple offers are used on one card.  If you are able to, I suggest you move any current monthly spend either to a  credit card with a $0 balance that you can easily PIF each month, or move to cash spending for those expenses.  I think @coldfusion   and others have given  good takeaways for a plan forward.

I'm worried because my credit matters to me, and I want to find a way to pay all this off, clean up my credit, and eventually be able to open more cards in the future.

Sorry, I'm not an expert on this, but I appreciate your help and advice.

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[KatzNDawgs]

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@msmjj01 wrote:

Sorry for the confusion.

Out of a total credit card debt of $200k, around $60k is outstanding. All balances are being paid off monthly on time, with no missed payments or derogatory marks. However, my credit score is currently low due to the high balances.

My monthly spending across all cards is $60-70k, which I pay in full exactly three weeks after each charge is made, even before the statement closes. So, despite paying off the $70k monthly, there is still a large remaining balance. This balance came from a loan I took out through a Citi card and a balance transfer offer, which I maxed out for a family member's surgery and treatments. I'm wondering if paying in full like this has any positive impact.

I'm worried because my credit matters to me, and I want to find a way to pay all this off, clean up my credit, and eventually be able to open more cards in the future.

Sorry, I'm not an expert on this, but I appreciate your help and advice.

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Please clarify. You have CL across 20 cards of 200k. You spend monthly 60-70k and pay that 60-70k spend off completely before statement date. That should give 0% util reported. However you mention some large BT(s) to a credit card that doesn't seem included in the above calculations - please let us know what the total owed vs CL is for this that is *not* paid off monthly.

In addition, a score of below 600 sounds like it inidcates issues other than %util. Do you have any other derogs like lates, collections, etc? In general paying off as much as possible is what you want to aim for,  but with more details we may be able to give better specific advice.

[msmjj01]

No other issue or derog or antrging

in time monthly minimum on loans

CITI - balance transfer offer 25k

CITI - balance transfer offer 15k

CITI - loan 24k

Barclays - balance transfer 10k

AU - balance transfer from my oartners - 16k

everything else gets paid off in full 

[Thomas_Thumb]

Score aside, you absolutely need to not mingle business and personal expenses on the same cards. Are all personal expenses/debt on different cards from business expenses?

A potential issue for the OP is putting businesses on cards that carry personal debt. Debt carryover means high apr interest rates. The monthly businesses would crank up the average monthly balance even though paid off before statement cut date. In that situation the customary business that are paid every month are hit with high interest charges.

Business charges need to be on dedicated cards that are PIF.  Not good if the business is having to absorb unwarranted apr fees.

[FicoMike0]

You list some balances, but without cl, not much help. You also mentioned being balance chased. That's a really bad sign.

It looks like your agg util is about 40%. I think there is a break point at <39%, getting under might help. As far as individual util, you want to reduce the highest. Since you're being balance chased, that number is likely close to 100%. Unless you can pif that account, not much you can do. If you have an account that's not being chased, you might save it by reducing its balance.

I hate to say it, but you seem to have fallen over the ledge.  Your score is low because of util. You might lower util. with more credit, which you can't get, because your score is low.a

you might contact the lenders about hardship plans. If they lower the interest, you could put more on the principal.