how do I get the best score from my CC utilization??

[Jerroldtrice]

Hi All!! We have been pre-approved for a mortgage but we are going with new construction and it will be a few months before we will move forward. The LO gave us a couple of homework assignments while we wait. We would like to get our scores up as much as possible before we close. There is only 1 unpaid collection between the 2 of us, which we are working on doing a PFD.

I've heard that how you manipulate your CC utilization can help your scores. So I'm wondering what is the best way to do this. Our cards are:

Care Credit/GE $1,000 limit. 0 balance since we only use this one when we have a large medical or dental bill.

Unsecured Credit One-$1500 limit. $220 balance. Will be paid off next month.

Unsecured Capital One-$300 limit. 0 balance

2 secured Applied Bank cards. One is mine and one the wife's from when we were in beginning stages of rebuilding. One has a limit of $500 and the other $1000. Both zero balances. Used and paid off every month.

Should we use all of them and pay them off every month or carry a balance on 1 or 2? I'm confused on what is the best thing to do with our utilization.

Also, on a sidenote, we paid off an old charge off months ago. They updated as settled but still show the remaining balance. Is this correct reporting? My LO made a face when she saw it and said she thought it should show a zero balance and that could help our overall credit look when it goes through UW. Does anyone know what we should do with that??

Thanks!!!

[ah12345]

You might wanna let a small balance report on 1 or 2 cards FICO likes to see small balance on revolving credit try to keep utility under 10% that should give you maximum credit potential. If it was settle for less with original creditor unless you got it in writing that paying on the charge off was going to be considered payed in full I think the creditor can still report the remaining balance since they reported the account as settle. You can try disputing it with the credit agencies see what happens. Any revolving account with a balance FICO will use it against utility and will potential lower your score.

[MarineVietVet]

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@ah12345 wrote:
You might wanna let a small balance report on 1 or 2 cards FICO likes to see small balance on revolving credit try to keep utility under 10% that should give you maximum credit potential. If it was settle for less with original creditor unless you got it in writing that paying on the charge off was going to be considered payed in full I think the creditor can still report the remaining balance since they reported the account as settle. You can try disputing it with the credit agencies see what happens. Any revolving account with a balance FICO will use it against utility and will potential lower your score.

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What would be the basis of any dispute?

[MarineVietVet]

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@Jerroldtrice wrote:

Hi All!! We have been pre-approved for a mortgage but we are going with new construction and it will be a few months before we will move forward. The LO gave us a couple of homework assignments while we wait. We would like to get our scores up as much as possible before we close. There is only 1 unpaid collection between the 2 of us, which we are working on doing a PFD.

I've heard that how you manipulate your CC utilization can help your scores. So I'm wondering what is the best way to do this. Our cards are:

Care Credit/GE $1,000 limit. 0 balance since we only use this one when we have a large medical or dental bill.

Unsecured Credit One-$1500 limit. $220 balance. Will be paid off next month.

Unsecured Capital One-$300 limit. 0 balance

2 secured Applied Bank cards. One is mine and one the wife's from when we were in beginning stages of rebuilding. One has a limit of $500 and the other $1000. Both zero balances. Used and paid off every month.

Should we use all of them and pay them off every month or carry a balance on 1 or 2? I'm confused on what is the best thing to do with our utilization.

Also, on a sidenote, we paid off an old charge off months ago. They updated as settled but still show the remaining balance. Is this correct reporting? My LO made a face when she saw it and said she thought it should show a zero balance and that could help our overall credit look when it goes through UW. Does anyone know what we should do with that??

Thanks!!!

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Everyone's situation is different and there is no one size fits all approach to this and therefore no "ideal" number 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.