Utilization Question

[Birdie1]

Hi! I have been working on a rebuild for about 2 years now.  I started off with a score in the 400's and have gotten up to a 634 as of now.  I have 2 credit cards that i just payed both off to 0 (only 800 total CL) so my utilization will go from 96% to 0%.  Is it better to just by something to add like a 5$ balance on one of the cards or leave them at 0?

[JoeRockhead]

Yes, having all zero balances will cause a penalty to your scores... I know it doesn't make sense but that's the way it is.... I'd be sure to leave something on there that registers at least 1% of you CL... awesome job though in paying it all down!

[Birdie1]

Thank you! I will do exactly that!  its been rough for sure but I have not had a late payment in 2 years and my score has improved so much.  Do you think there will be a big score jump to go from the 96% to 1%?

[JoeRockhead]

@Birdie1 It's hard to say without knowing more about your credit profile, but I would suspect you'll see a nice bump to your scores. If you have baddies on there such as lates, or charge offs you'll see even more of a jump when those fall off.

[Birdie1]

I can work on giving you a snapshot.  I Have an LVNV CO that i just paid that should be coming off in the next 30 days.  

1- 120 late from 2020 on my mortgage- then always paid as agreed since then.

1- 90 day late in 09/21 and 4 months of FC on my old car- it had a 7k balance on the loan but i let them repo it and got a new car because it was damaged. I dont know what or how But Ally updated the Balance to 0 and made it current.

2- 120 lates from us dept of ed 1/2020 and 2/2020.

Ally CC 800 CL opened august 2022- always paid as agreed

Cap one CC 300 CL  opened September 2022 always paid as agreed

Cap one car payment opened 7/2021 always paid as agreed.

I am honestly surprised to be at 634 with my Credit history- but it seems as time goes by that all these lates are really not hurting my score as much.

[JoeRockhead]

@Birdie1 appreciate all the info... yes the lates effect on your score do diminish over time. You will still run across some lenders that want to use them as a reason for denials, but like I said, once you get to where those baddies are all gone completely from your reports, you'll see a significant bump in your scores... All you can do right now is continue what you're doing, and wait. Keep your utilization across your cards under 5% (4.9% to be exact) and your scores should steadily improve from here. Once your scores get above 680, and even more so when they go above 700, that will open the doors to some other prime lenders and cards. I'd wait until then to apply for anything else... hang in there, you're so close, it will happen before you know it.