Raising fico score

[startingovr31]

I am new to this discussion board. I have found all of the questions and answers I have read so far very helpful. I was wondering if paying cc down to 10.00 will help raise my score. Last month I left a balance of 10.00 dollars and this month I was going to do the same. Do you think this is helpful.

[Anonymous]

I believe you need to show that you are using your credit (credit card) to increase your score.

What I do is I leave a balance about 5% to 8% on my credit cards. Yes im paying for some interest monthly but I look at it this way. I pay little interest but after a few years I can get a good loan and pay less with my mortgage.

[DaveSignal]

The amount doesn't really matter.  Its your % utilization that has the score impact.  I think you get max points (or close to it) for this area of FICO if you keep it below 10% (less than 10% of your total credit limit is debt).

EDIT: Other forum members here have proven that you will get the most FICO points for utilization if less than half of your credit cards is reporting a balance (everything else should be at $0 balance).  

Although I, personally, only have 1 card that reports a balance, you don't really have to do this indefinately.  The point boost from utilization changes is instant, so if you find it difficult to keep up, you could just do this the month before you apply for a loan.

[startingovr31]

Ok Dave signal so basically I need to leave something on the balance. I have two cards one has a 500 dollar limit and one has a 300. So I need to leave about 8-10% of those balances on my card. I am trying to get the most points. My card cycles on the 4th so anytime after that I will see a credit score update. Ok so on the one with 500 dollar limit 8% is about 40 dollars is what I need to leave as a balance?

[DaveSignal]

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@startingovr31 wrote:
Ok Dave signal so basically I need to leave something on the balance. I have two cards one has a 500 dollar limit and one has a 300. Ok so on the one with 500 dollar limit 8% is about 40 dollars is what I need to leave as a balance?

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Yes.  Since you have more credit on the $500 card, that is the easier one to let a balance report on.  So, PIF your $300 card before the statement date, and try to leave less than $50 on the $500 card.

This is more difficult and takes more planning with small credit limits, because if the $500 card is one that you are regularly using, one purchase could take you well over the %10 or better that you were aiming for.  Just be careful and, as mentioned earlier, the utilization boost is instant, so if you miss it one month, just don't apply for anything that month and get your balances right for the next month.  Eventually, if your credit gets good enough for a high-limit card, you won't have to worry about this so much since the balance will be under 10% just by paying before the date due and without putting much other thought into it.

[Anonymous]

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@startingovr31 wrote:

I am new to this discussion board. I have found all of the questions and answers I have read so far very helpful. I was wondering if paying cc down to 10.00 will help raise my score. Last month I left a balance of 10.00 dollars and this month I was going to do the same. Do you think this is helpful.

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Welcome to myFICO.

Everyone's situation is different and there is no one size fits all approach to this but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.