Two-fold question on score improvements with CCs

Anonymous · ‎09-08-2015

Right now, I'm sitting at 60% utilization on 3 cards. I'm paying each card down, but am curious how the score benefits work with paying them off.

$400/$1500
$1500/$2000
$1100/$1500

Card 1 will be at 0% next Friday. Then I'll pay off Card 2. Card 3 is last, as it has a 0% intor APR. I'm going to get it down to < $100 as my mortgage broker said to ensure one card has a small revolving balance. So, the questions.

Will having a high utilization effect my scores long term - ie, is the historical balance factored into the FICO or ignored?
If I have the two cards at 0%, will I see month over month improvements or do I need to be making payments for that to happen?

Anonymous · ‎09-08-2015

Historical balances are ignored, utilization is a month to month calculation.

What he told you is correct, go ahead and pay down until you have 1 card between 2 and 9% reporting.

As long as your card is reporting, i.e. it's not closed and zero balance, you will get an OK current status on your report whether you use the card or not.

Most major lenders will not autoclose unless it's been over a year, but most people recommend using all of your cards regularly for small amounts, or, alternate which card you use, so your lenders see you using it. Either way, used or not, as long as it is open it will report, and that's what matters to your credit history.

As far as scoring, if you have no bad things on your report, you will see a nice increase when you get your utilization down, and then as your accounts age you will see small increases, generally at milestone dates (6 months, a year, etc).

If you have any derogatories, fixing your utilization will help, but not as much. For example, we had one card reporting >50%, my EX is clean, and when we fixed that it jumped 23 points, while it only jumped ten on my other reports.

HTH.

Anonymous · ‎09-08-2015

Thanks. Yes, that helps.

I'm currently trying to eek out every point I can get. I'm 4 points shy of qualifying. My goal is to be ready to app in January.

I have one derog left. It's a smallish medical collection from 2008 that's being reported improperly. Just waiting for an update to pay it off.

Anonymous · ‎09-08-2015

@Anonymous wrote:
Right now, I'm sitting at 60% utilization on 3 cards. I'm paying each card down, but am curious how the score benefits work with paying them off.

$400/$1500
$1500/$2000
$1100/$1500
Card 1 will be at 0% next Friday. Then I'll pay off Card 2. Card 3 is last, as it has a 0% intor APR. I'm going to get it down to < $100 as my mortgage broker said to ensure one card has a small revolving balance. So, the questions.

Will having a high utilization effect my scores long term - ie, is the historical balance factored into the FICO or ignored?
If I have the two cards at 0%, will I see month over month improvements or do I need to be making payments for that to happen?

I think you'll see a score bump if you can get each card under 30% and also 30% overall UTI. Then a small bump for all under 20 and under 10 is great. All at zero except for one under 9% will be a bump again.

As stated, the UTI doesnt have a memory. Each month calculated as a stand alone event.

hth

Anonymous · ‎09-08-2015

@Anonymous wrote:
@Anonymous wrote:
Right now, I'm sitting at 60% utilization on 3 cards. I'm paying each card down, but am curious how the score benefits work with paying them off.

$400/$1500
$1500/$2000
$1100/$1500
Card 1 will be at 0% next Friday. Then I'll pay off Card 2. Card 3 is last, as it has a 0% intor APR. I'm going to get it down to < $100 as my mortgage broker said to ensure one card has a small revolving balance. So, the questions.

Will having a high utilization effect my scores long term - ie, is the historical balance factored into the FICO or ignored?
If I have the two cards at 0%, will I see month over month improvements or do I need to be making payments for that to happen?
I think you'll see a score bump if you can get each card under 30% and also 30% overall UTI. Then a small bump for all under 20 and under 10 is great. All at zero except for one under 9% will be a bump again.

As stated, the UTI doesnt have a memory. Each month calculated as a stand alone event.

hth

Actually its not even "each month". UTI is a snapshot in time, as cards report at various times thorughout the month and UTI can shift over a matter of days in some cases.

Anonymous · ‎09-10-2015

@Anonymous wrote:
Actually its not even "each month". UTI is a snapshot in time, as cards report at various times thorughout the month and UTI can shift over a matter of days in some cases.

Thanks.

Since I'm trying to maximize my score, would it be best to switch all the auto-payments (Netflix, Hulu, etc) to a single card so I don't end up with a balance on more than one? I really hate trying to game the system, but this seems like nothing but a game...

Anonymous · ‎09-10-2015

As a follow-on question.

The LO I'm working with told me NOT to open or close anything until I had the mortgage signed, sealed and delivered. I currently have $6,950 worth of student loans (Federal) that are up to date. The MyFICO calculator guesstimates I could raise my FICO 08 score by 10 points on each bureau if I paid off $5,725 worth of the loans. I'm going to be back in touch with the LO in January, and am going to ask before I make any moves on paying it down.

That being said, I'm just curious if that would affect my mortgage scores as much or not at all.

Anonymous · ‎09-10-2015

@Anonymous wrote:
@Anonymous wrote:
Actually its not even "each month". UTI is a snapshot in time, as cards report at various times thorughout the month and UTI can shift over a matter of days in some cases.
Thanks.

Since I'm trying to maximize my score, would it be best to switch all the auto-payments (Netflix, Hulu, etc) to a single card so I don't end up with a balance on more than one? I really hate trying to game the system, but this seems like nothing but a game...

I try to put all of that kind of stuff on one card, just to simplify things.

Yup, its all a game.... You have to learn the rules to play it to your advantage. The kicker is that only the "other team" has a copy of the rulebook. We have to infer the rules by trial and error, kind of like playing kreigspeil....

Anonymous · ‎09-10-2015

@Anonymous wrote:
As a follow-on question.

The LO I'm working with told me NOT to open or close anything until I had the mortgage signed, sealed and delivered. I currently have $6,950 worth of student loans (Federal) that are up to date. The MyFICO calculator guesstimates I could raise my FICO 08 score by 10 points on each bureau if I paid off $5,725 worth of the loans. I'm going to be back in touch with the LO in January, and am going to ask before I make any moves on paying it down.

That being said, I'm just curious if that would affect my mortgage scores as much or not at all.

Reducing balances on installment loans shouldn't hurt anything - the "don't open or close accounts" advice is to keep you scores from dropping unexpectedly, particularly if you're sitting on a breakpoint.