Paying off cards to 0 a bad idea?

[BuffaloBoy]

I was going to consolidate my cards into my auto loan (i have equity) - But my mortgage officer said not to deplete my accounts to 0. That its bad. Any truth to this?

[pizzadude]

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@BuffaloBoy wrote:

I was going to consolidate my cards into my auto loan (i have equity) - But my mortgage officer said not to deplete my accounts to 0. That its bad. Any truth to this?

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In terms of how FICO scores your revolving utilization, it's almost always better to have lower utilization.   

Many people have found that paying all cards to a 0 balance, while leaving one card with <9% utilization yields the optimal score.

What does your revolving utilization look like currently?

[BuffaloBoy]

Hi Pizza

90% one card

95% another

92% another card

100% one card

100% another card

All of these could be consolidated onto my auto loan - already approved. Think it would help? It would turn them from revolving to installment.

[pizzadude]

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@BuffaloBoy wrote:

Hi Pizza

90% one card

95% another

92% another card

100% one card

100% another card

All of these could be consolidated onto my auto loan - already approved. Think it would help? It would turn them from revolving to installment.

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If all of your cards are maxed out then you'll see a large FICO score improvement when you pay them off.   Try to ensure that your creditors don't close your accounts after you pay though.

[BuffaloBoy]

What can I do to make sure they dont do that?

[pizzadude]

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@BuffaloBoy wrote:

What can I do to make sure they dont do that?

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Having maxed cards can lead to AA, either closing the account or CLDs.   You could call and explain that you're going to pay the account off and get an idea of what they think.    Have any of them chopped your credit limits recently?

[youdontkillmoney]

I pay my cc's off to zero all the time. Don't play the cc game, use them to benefit you, and only keep a balance if you feel comfortable with it, if not, pay if off. This is my philosophy for decades and I have platinum credit. I have all the credit I want and more than I need.

[takeshi74]

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@BuffaloBoy wrote:

I was going to consolidate my cards into my auto loan (i have equity) - But my mortgage officer said not to deplete my accounts to 0. That its bad. Any truth to this?

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It's not good to have 0 on all accounts.  General recommendation for optimcal scoring is one card reporting a balance of ~10% or less.  You don't need to carry a balance to have a balance report.

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@BuffaloBoy wrote:

What can I do to make sure they dont do that?

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Not much you can do if they've already decided to take AA.  Some may close accounts.  Some may balance chase.  Some may do nothing.  You'll have to address it when and if it happens.