Big Util Drop -- How Will It Affect Credit Card Limits, CRA Scores?

[OnWayUpinTexas]

I'm about to make some big payments to some credit cards I've been carrying a balance on (in some cases) for many years ...

1.  Dell Financial Services (CIT bank "store" account) -- balance is $6500 -- CL is $7000 -- paying balance down to 10% util, or $700*

2.  Macy's (Citi-product store card) -- balance is $1750 -- CL is $2500 -- paying balance down to 10% util, or $250*

3.  Rooms-to-Go (GEMB-product furniture store card) -- balance is $2840 -- CL is $5000 -- paying IN FULL (bought living room furniture back in 2009 w/ no payments and interest until Jan. 2011 -- won't have paid a dime of interest on that purchase!)

4.  Orchard Bank MC -- balance is $615 (only been carrying this balance a month) -- CL is $700 -- paying IN FULL (have sock-drawered this card and my $300-limit Household Bank MC, which is also PIF)

5.  Sears (Citi-product store card) -- balance is $1800 (only been carrying this balance for a few weeks since old washer/dryer had to be replaced) -- CL is $2400 -- paying IN FULL

*With Dell and Macy's, I had originally planned to PIF, but the holidays have caught up with me a little bit and have had to trim those PIF plans back a bit.

AFTER the above is done, the only "cards" I will carry a balance on (other than the small Dell and Macy's balances noted above) will be a Home Depot store card ($800 balance, $1700 CL) and my Barclay's (Apple) Financing Visa, which I just put a new iMac on under the promotional 12-months no interest ($1350 balance, $1500 CL, plan to PIF in 10 mos.).  I also have a home-improvement LOC with American General ($5000 balance, $10K CL) that reports as a revolving account.  My local bank Visa account ($2500 CL--far and away my best Visa/MC account) and Amex Zync I won't carry balances on (not that I could with the Zync card, of course).

Overall, my calculations show that my utilization will drop from 68% (BAD!, I know) to something around 25% (better)!

The FICO Score Simulator predicts that my EQ score will jump way up from it's current level (below) to between 714 and 754.  We'll see ... (I know the simulator can't always be counted on)

I'm also anxious to see how Dell, Macy's, Sears, GEMB, and Orchard/Household (and anyone else) react in terms of possible CLIs, which may further help the utilization effort.

Any predictions or other thoughts on this plan?  Thanks ...

[trumpet-205]

A good idea would be snowball method, where you PIF the smallest balance first, next smallest, etc.

[llecs]

Here's what I show:

Your total balances that are being reported are $18,905 and the total CLs that are being reported are $31,100. Your overall utilization should be at 60.8% if all are reporting exactly as posted. This excludes your Amex which isn't factored into EQ, but is factored into TU (TU98: balance and high limit factored in). This also excludes your Macys since they are no longer factored into util per scoring because the CL isn't reported.

Unless I missed one, your Dell, Rooms to Go, Orchard, Household, Sears, Home Depot, iTunes, LOC, and your bank CC (assuming that had no balance) are included in this figure.

If you are paying everything off except for the ones mentioned, then you would have paid off $17,555 in debt. That's awesome!

If everything reports exactly as is, with the new balances and same CL, then I figure your new util drops to 16.9%, again excluding Macys since it isn't being scored.

Score change? I'd guess 40-50 on both EQ and TU, with more on EQ than TU.

Here's my math:

Before:

Dell	6500	7000
RTG	2840	5000
OB	615	700
HFC	0	300
Sears	1800	2400
HD	800	1700
iTunes	1350	1500
LOC	5000	10000
Bank	0	2500
	18905	31100	0.607878

After:

Dell	700	7000
RTG	0	5000
OB	615	700
HFC	0	300
Sears	1800	2400
HD	800	1700
iTunes	1350	1500
LOC	0	10000
Bank	0	2500
	5265	31100	0.169293

Per CL changes, if you ask for a CLI maybe they'll give it to you. Look around to see if you'll get hit with an inquiry or not. Some do. Also, many CCCs are CLDing folks who have carried balances for a while. While it doesn't impact you, Macys is like that. Keep an eye on that. You can always ask for CLIs later though to recover those limits.

Finally, all above is assuming that all else stays the same. It also assumes that none of these CCs are closed.

[OnWayUpinTexas]

Wow, llecs   Thanks for going to that effort!  Looks like you and I came up with similar spreadsheets to figure this out ... Really,  thanks!

Your "after" scenario is correct, except for the following (my OP may not have been clear, but I'm not able to payoff the LOC yet):

After:

Dell	700	7000
RTG	0	5000
OB	0	700
HFC	0	300
Sears	0	2400
HD	800	1700
iTunes	1350	1500
LOC	5000	10000
Bank	0	2500
	7850	31100	0.252411

So, am I understanding you correctly that Macy's doesn't factor into utilization at all because they don't report a credit limit?

I am DEFINITELY careful about who to ask for a CLI from.  I asked Orchard a year or more ago and they said "no."  That is the ONLY time I have asked (anyone).  Then a couple months later, they increased from $300-$500, and then a few months later to $700.  And, even when I get to THINKING about asking a creditor for a CLI, I always research here to see who hard pulls for CLIs, which I want to avoid.

40-50 points on scores would be awesome (factoring in, of course, that we're now talking about paying off $11K-something in debt versus $18K, so I would expect score increases to be less).

And, all the cards are open.

Fingers-crossed on your predictions.

Thanks again for your earnest comments and input!

---

[llecs]

I'd guess closer to 40 after the change. Most on EQ than on TU.

---

@OnWayUpinTexas wrote:

So, am I understanding you correctly that Macy's doesn't factor into utilization at all because they don't report a credit limit. 

---

This past spring, DSNB (Macys & Bloomingdales) decided to remove the CLs from everyone's CRs. When this happened, the TL is removed from util per scoring. Overnight, I lost over $7000 in available credit. Bums. Good news is that you can max out the card and it won't ding you (assuming Macys doesn't lower their CL first).

[OnWayUpinTexas]

Thanks for the info on Macy's.  I've been lucky so far, I guess, though I've only been carrying the current balance for a few months (and after the account re-posts tonight, it will be (almost) gone!).

I'll update the post in a month or so when all the payees have reported and updated.

Thanks again.

[OnWayUpinTexas]

OK, factoring in an approval this afternoon for $16K Chase MasterCard ... (post here)

After:

Dell	700	7000
RTG	0	5000
OB	0	700
HFC	0	300
Sears	0	2400
HD	800	1700
iTunes	1350	1500
LOC	5000	10000
Bank	0	2500
Chase	0	16000	means back to a 16.7% util rate!

[OnWayUpinTexas]

That is, IF the new card reports a CL -- which I'm reading some of the World MCs do not.