Seeking advice on how to improve credit when utilization is high

[SouthJamaica]

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@Expansion wrote:

FinStar recommended I come over here and post.

I am looking to improve my credit. 

My utilization is high (85.6%) because of a very rough period a while back where I had to use my cards to cover my butt. 

My credit has been established since 2001.

651 Equifax,

675 TransUnion,

not sure about my Experian. 

I always pay on time.  What's tanking my score is the high utilization.  

Adding this in for context:

My situation is stable.  My income is stable and growing.  My business is full with a waitlist. 

I don't need credit right now.   I'm in a position where I have the mental space and energy to work on this.   I am not pursuing bankrupcy, that's not my path.  Respect to those who do, but that's not where I'm at.  

I would appreciate any suggestions.

Right now I am continuing to steadily pay things down.   I haven't added to my balances for several years now.  

Also, I am, over time, getting small consolidation loans (first one through lending club paid off, second one through upstart just begun) to move utilization off the credit cards and also reduce the APRs.  

Because there have been times when I was approved for something unexpectedly -- lending club when I was in much worse position than I am now; upstart this past November -- I wanted to reach out to those who have a better sense of the terrain, if there are opportunities I might not be aware of that might be worth exploring.

Here's what I've got: 

CreditOne MC  -- using 0 of 1750 limit, 24.4%

CreditOne Visa -- using 0 of 650 limit, 23.65%

Chase Slate using -- 0 of 1750 limit, 22.99%

Citi Double Cash: using 0 of 500 limit, 22.99%

Navy Federal Visa Platinum:  using 9,163 of 10,000 limit, 15.99%
Bank of America Visa: using 1,062 of 1,100 limit, 14.99%
AmEx Blue: using 2,831 of 4,000 limit, 14.24%

Santander Sphere: using 4,373 of 5,000 limit, 13.73%

Mercury Mastercard: using 2,803 of 3,300 limit, 12.99%

Discover it Blue: using 11,777 of 12,500 limit, 12.99%

Wells Fargo Platinum: using 7,391 of 8,000 limit, 10.99%

Bank of America BankAmericard Rewards Visa Platinum Plus: using 13,665 of 15,500, 9.90%

Barclay Ring: using 6,350 of 6,750 limit, 8%

Citi Diamond Preferred (closed over 10 years ago because I had the option to keep the 5.24 APR and close the account, or keep the account open and the APR went up to triple or quadruple that): 1,142.15 balance (limit is 0 since it's closed), 5.24%

I also have:

a 6,500 loan through Lending Club that was paid off 10/2021

and

11/2021 I got an 8,000 loan through Upstart for 36 months, and I've made the 2 monthly payments so far.  (so utilization on that is 7427 of 8,000).  

Miraculously I was approved for that Upstart loan, which I used to pay off my highest-rate cards.  

Around the time I paid off the Lending Club loan and got the Upstart loan, my TransUnion Fico Score 8 bumped from "Just under 'good'" where it had been hanging out for years, to "officially good" (like a solid 672).  

My overall goals:

-increase my limits so my utilization goes down, and also, so I have elbow room if there's an emergency

-decrease my APRs 

-be able to be approved for new credit

-and pay all this stuff down

Ideas on what would be a doable, smart next move?

I just got approved for a second Lending Club loan but the rate (19.94%) is higher than any of the credit cards I would use the loan to pay off, so it doesn't really make sense.  It's also annoying because a few months ago when my scores weren't as high and my utilization was worse, they offered me a 15% rate.  

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In the first place, I want to commend you for your cool head thinking, and I think you have basically the right approach.

I would forget about increasing my limits for now, I don't think that's going to happen, so why waste brain cells on it.

IMHO (a) the main thing is to improve your profile so that you could become more attractive to a lender, and (b) the first thing you need to do is get all 90% accounts down to 78%

After that, I would concentrate on getting highest utilization accounts down to 68%, then 58%, then 48%

Once you've got the highest ones down to 48% your profile should be in a noticeably improved position, and then you can start looking for juicy balance transfer offers.

Sorry, I was responding to the original post. Didn't realize this was an old post which has been updated by the August 19th post. I already responded to the updated post. If the moderators want to delete this post entirely, I wouldn't mind

[CrSter]

Whenever even one of my credit cards is used anywhere near its credit limit, my credit score drops as much as 100 points until it is paid off.  I always pay all my cards off in full each month, but the delay between payment and reporting usually results in a month or two during which my score is lowered.

Just keep in mind that credit score isn't everything.  If you have a high credit score and have never used your cards for much of anything (the credit report shows Highest Balance meaning the most you have ever charged during some period from the past, not sure how far back they record - and also the log shows your balance month by month and most recent payment amount if they want to look that closely), that high credit score won't count for as much as you think.  A solid history of carrying balances and paying off decent amounts counts for a lot too.

[FireMedic1]

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@CrSter wrote:

Whenever even one of my credit cards is used anywhere near its credit limit, my credit score drops as much as 100 points until it is paid off. Your probably maxing it out when the statement cuts. Look up the statement date. PIF before that date so it doesnt report.

 I always pay all my cards off in full each month, Dont have all your accounts report a $0 balance. You'll get the all zero penalty.but the delay between payment and reporting usually results in a month or two during which my score is lowered.

Just keep in mind that credit score isn't everything.  If you have a high credit score and have never used your cards for much of anything (the credit report shows Highest Balance meaning the most you have ever charged during some period from the past, not sure how far back they record - and also the log shows your balance month by month and most recent payment amount if they want to look that closely), that high credit score won't count for as much as you think.  A solid history of carrying balances and paying off decent amounts counts for a lot too.

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@CrSterGo to all your accounts and look up the statement date. Write them down. Pay all except 1 <6% in full before the statement date. Then PIF the 1 card reporting before the due date. Losing 100 points must be Vantage or CK scores. Your a bit off track swiping and paying.

[CrSter]

I looked back, my Experian credit score dropped over -100 points when I maxed out one of my credit cards.  My TransUnion score dropped even more, over -150 points.   And then after I paid that card off in full, it jumped back to where it was, back over 800.

The maxed out balance in question was low 6 figures, but that was just one of about a dozen cards I have, and they all have high 5 to low 6 figure credit lines.

I think there is a limit to how much your score will drop no matter how many cards you max out, because once, years ago, I maxed out multiple credit cards,  and until I paid them all off in full the next month, my score dropped about the same as what I have experienced with one max out.

Seriously, what good is credit if you don't use it?  I use it heavily sometimes, and then I get cash back, points, gifts, whatever.  I just make sure to pay off the balances in full each month.

I note what you're saying about maintaining other than a 0 balance on my cards, but once I was trying to get a new credit card with one of the majors (I already have a couple with this bank), and the lady actually used the silly excuse of that I had balances on a half dozen cards to deny issuing me another card.  Granted, they probably figured I had enough credit with them, so maybe that was the real reason, but the excuse she used on the phone was that I had balances on too many accounts - even though the sum total of those half dozen balances was maybe fifty dollars.

As well, if I charge five or six figures on a card one month, there is no way I am going to do anything other than pay it off in full the next month, lest I get hit with finance charges.

[FireMedic1]

I dont want to hijack from the @Expansion 's thread. You dont lose 150 pts with FICO for maxed cards reporting. So your looking at Vantage. The point is. Yes use your 6 figure cards. Dont let them report a high balance before statement date. PIF before that and you wont lose 150 pts.

Back to @Expansion improve credit thread. Just hopped in to help you out avioding pt losses.

[CrSter]

You are correct that the over 100 pt drop on Experian was based on Vantage, and the over 150 point drop on TransUnion also based on Vantage.  Both are in fact based on 3.0 Vantage so not sure why there would even be any difference between the two? so that's interesting in itself.

However, I just pulled my score on a different bank's website, and for that exact same period when I maxed out 1 credit card my score dropped about -120 points based on the Fico 9 model.

In all cases it went back above 800 again after I paid off the card.

I try to post only based on what I know from personal experience - not what I think should happen based on "theory."

[Expansion]

Hey there @CrSter!  I hear what you've been through. 

And, our situations are extremely different:

I have been carrying high balances for years and in the process of paying them down.

It sounds like you have been paying high balances off almost immediately.   

So I would respectfully ask you to start your own thread. 

That way other community members who are following along about my situation do not get confused by a change of topic to a very different situation.  And they can follow along about your situation and learn about that too!   

Thank you!   

@FinStar 

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[Expansion]

@tcbofade Question: what is your strategy, to make sure you are able to move the balance to another 0% BT card, when the first 0% BT expires? 

After everything I've been through, part of me is worried about running out of BTOs.  Or not finding one I can get approved for.  

Thank you always for sharing your experience.  It gives me hope and clear next steps

[tcbofade]

To be clear and honest, there is never a guarantee that the next zero percent BT offer will be available.

I do have a few ultra low interest rate cards that I COULD BT too and pay a very small amount of interest if necessary. 

Certain lenders, Citi, Chase, Discover, PenFed, WellsFargo seem to offer myself and/or DW BTs fairly regularly... sometimes, they go away.  Currently, Chase is doing an AWESOME job of renewing BT offers every month... so that we always have more than 30 days to act if they decide not to renew the offer. 

The next two zero percent balances to expire will be in January, and we have cash on hand to pay them off...

I am in "two player mode" which means that I handle DW's credit and financial profile as well.   She'll be eligible for the Wells Fargo Reflect card with a 21 month zero percent offer in January.

After that, it comes down to moderation.  Don't grab offers that you don't need, some lenders are very sensitive to the number of new accounts... some, not so much.

There are no guarantees.  That keeps it interesting! 

[Expansion]

@tcbofade -- thank you, this is very helpful! 

Part of the reason I ask is that the Discover I just was approved for has a 24.9% APR (yikes) after the 0% BT offer expires.  But I figure worst case scenario, if I can't line up another 0% BTO when the current one expires, then I could transfer the balance to my Navy Fed CC which has no BT fees.

Speaking of the sensitivity to the number of new accounts -- kinda related -- is there a point at which you need to close old cards you really don't want?   How do you know when to do that? 

My sense is right now it would not be advisable since it would hurt my overall utilization.   But at some point I'd be happy to close out the high-rate, low credit line CreditOnes and Merrick cards that I have. 

As always, I look forward to your suggestions and insight!