cancel
Showing results for 
Search instead for 
Did you mean: 

Credit Card Utilization Help

tag
Lmedrano
New Member

Credit Card Utilization Help

Hello, 

 

Over the past years ive been repairing my credit report. I'm trying to get the highest score possible by paying all my credit cards before the statement closing date. What percentage should I be leaving in my CC? Do I pay them all and have a zero balance for the most optimal score or leave a minimal balance? I currently have the funds available to eliminate the debt but don't want my score to drop. My current FICO 8 score is EQ 625, TU 666, EX 646. 

 

CC 1 -CL of $700 current balance $586

CC2 - CL of $300 current balance $0

CC3 - CL of $1000 current balance $211

CC4 - CL of $750 current balance of $366

CC5 - CL of $2000 current balance $2352

 

Combined credit utilization if my math is righ 74%. Should I bring all my cards to at least 9% balance or pay them all off.  

Thank you for your help and advice in advance.

 

11 REPLIES 11
JoeRockhead
Senior Contributor

Re: Credit Card Utilization Help

Some might suggest practicing AZE0 for the optimal effects to your scores. It's also OK to have a small balance on each card as long as its low, 1% to 8.9%.

 

Once you go above 50% usage your score starts taking more significant hits. Any individual card utilization of 90%+ is considered maxed out and there will be heavy hit to your scores. 

 

Get your balances paid down to under 9% on each card and you should see a nice improvement to your scores.

Message 2 of 12
FireMedic1
Community Leader
Mega Contributor

Re: Credit Card Utilization Help

This ^^^^^^^^ FICO also likes less than half your cards reporting and never have none report.


Message 3 of 12
SouthJamaica
Mega Contributor

Re: Credit Card Utilization Help


@Lmedrano wrote:

Hello, 

 

Over the past years ive been repairing my credit report. I'm trying to get the highest score possible by paying all my credit cards before the statement closing date. What percentage should I be leaving in my CC? Do I pay them all and have a zero balance for the most optimal score or leave a minimal balance? I currently have the funds available to eliminate the debt but don't want my score to drop. My current FICO 8 score is EQ 625, TU 666, EX 646. 

 

CC 1 -CL of $700 current balance $586

CC2 - CL of $300 current balance $0

CC3 - CL of $1000 current balance $211

CC4 - CL of $750 current balance of $366

CC5 - CL of $2000 current balance $2352

 

Combined credit utilization if my math is righ 74%. Should I bring all my cards to at least 9% balance or pay them all off.  

Thank you for your help and advice in advance.

 


If you want to absolutely optimize it, you should have 4 of the cards reporting a zero balance and one of the cards reporting a small balance.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 4 of 12
Thomas_Thumb
Senior Contributor

Re: Credit Card Utilization Help


@Lmedrano wrote:

Hello, 

 

Over the past years ive been repairing my credit report. I'm trying to get the highest score possible by paying all my credit cards before the statement closing date. What percentage should I be leaving in my CC? Do I pay them all and have a zero balance for the most optimal score or leave a minimal balance? I currently have the funds available to eliminate the debt but don't want my score to drop. My current FICO 8 score is EQ 625, TU 666, EX 646. 

 

CC 1 -CL of $700 current balance $586

CC2 - CL of $300 current balance $0

CC3 - CL of $1000 current balance $211

CC4 - CL of $750 current balance of $366

CC5 - CL of $2000 current balance $2352

 

Combined credit utilization if my math is righ 74%. Should I bring all my cards to at least 9% balance or pay them all off.  

Thank you for your help and advice in advance.


Given you have 5 cards, this is what I would recommend for best results:

1) Allow one or two cards to report a statement balance. Then pay those statement balances in full prior to their DUE dates.

 - Fico does penalize for "no recent revolving activity". Atleast one account must report a positive, non zero, balance to show recent activity.

 * One revolving account reporting a balance is sufficient to avoid the "no recent activity" penalty.

2) All your other cards should be paid to zero prior to their respective statement cut dates.

 - Fico does penalize for too many accounts reporting balances. The penalty generally increases as the # accounts reporting balances increases.

 * I have 5 cards as well and see no difference between 1 or 2 cards reporting. Having more than 2 report may cause a drop depending on the Fico model.

3) Reported balances should be "low". Statement balances are best kept under 9% of the card's credit limit to show a low utilization (UT) level.

 - Fico penalizes if either individual card UT or aggregate UT get too high. Elevated aggregate utilization start to impact score at lower levels than individual UT.

 * Under 29% UT on a card basis and 9% in aggregate are good benchmarks. However, under 9% on any cards that report balances simplifies things. It ensures aggregate UT will be under 9% regardless if the card(s) reporting have a high CL or low CL.

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 5 of 12
Junejer
Moderator Emeritus

Re: Credit Card Utilization Help

Hey @Lmedrano, welcome to the forums.

 

@Thomas_Thumbmade great recommendations. I'll double down on not allowing more than two of your cards to report a balance. For me, when I allow three cards to report balances, EQ tends to drop me down a few points. I have eight cards and an AU. My total balances $2, $55 and $129 and I lost two points when that third card reported a balance. My AU reports $5. EX doesn't care if I have 1 - 3 cards reporting low balances and TU seems to prefer that I have three versus two cards report.

 

I know most folks tout AZEO on this forum. I used to be one of them, when the main models were what we now call mortgage scores. But, with F8, AZEO is really not a thing that will cause a score bump or loss, given you have five cards.

 

You should see a nice bump when you get three cards to $0 and allow those other two to report small balances. CC5 is kicking your score's butt big time!







Starting Score: 469
Current Score: 848
Goal Score: 850

Take the myFICO Fitness Challenge
Message 6 of 12
Lmedrano
New Member

Re: Credit Card Utilization Help

Thank you all for the great advised. Today I paid off all my cards to a zero balance. Closing dates are not till the middle and end of the month. I did noticed that my mortgage scores are significant low. Honestly that's what I'm working on to eventually be able to apply for a home in the future. Current mortgage scores are:

EQ609, TU591,EX647. 

 

I'll probably leave an 5-8% balance on one card, my question is should this card be the one with the lowest or highest CL, or the older or newer one. Or it just does not matter. 

Thank you again. 


@Junejer wrote:

Hey @Lmedrano, welcome to the forums.

 

@Thomas_Thumbmade great recommendations. I'll double down on not allowing more than two of your cards to report a balance. For me, when I allow three cards to report balances, EQ tends to drop me down a few points. I have eight cards and an AU. My total balances $2, $55 and $129 and I lost two points when that third card reported a balance. My AU reports $5. EX doesn't care if I have 1 - 3 cards reporting low balances and TU seems to prefer that I have three versus two cards report.

 

I know most folks tout AZEO on this forum. I used to be one of them, when the main models were what we now call mortgage scores. But, with F8, AZEO is really not a thing that will cause a score bump or loss, given you have five cards.

 

You should see a nice bump when you get three cards to $0 and allow those other two to report small balances. CC5 is kicking your score's butt big time!


 

Message 7 of 12
coldfusion
Community Leader
Mega Contributor

Re: Credit Card Utilization Help


@Lmedrano wrote:

 

I'll probably leave an 5-8% balance on one card, my question is should this card be the one with the lowest or highest CL, or the older or newer one. Or it just does not matter.


It really wouldn't matter since as most you're looking at a balance of less than $200.  What would matter, since you'd in effect be following an AZEO process, is that the 1 card you are allowing to report a balance should be a bank card (e.g. Mastercard/Visa/Discover/AMEX credit card ) and not a store card.

(2/2024)
FICO 8 (EX) 846 (TU) 850 (EQ) 850
FICO 9 (EX) 850 (TU) 850 (EQ) 850

$1M+ club

Artist formerly known as the_old_curmudgeon who was formerly known as coldfusion
Message 8 of 12
Lmedrano
New Member

Re: Credit Card Utilization Help

Update: Thank you all for your help and advice. I was able to pay off all the credit cards to a zero balance and leave one card at 1%. Along with that I paid off one CC charged off account to a zero balance. The results are overwhelming, still have progress but it got the job done and now I closed on our home In 2 weeks! Thank you all for the help

 

FICO 8

EQ 673 

TU 706

EX 701

Message 9 of 12
SouthJamaica
Mega Contributor

Re: Credit Card Utilization Help


@Lmedrano wrote:

Update: Thank you all for your help and advice. I was able to pay off all the credit cards to a zero balance and leave one card at 1%. Along with that I paid off one CC charged off account to a zero balance. The results are overwhelming, still have progress but it got the job done and now I closed on our home In 2 weeks! Thank you all for the help

 

FICO 8

EQ 673 

TU 706

EX 701


Congratulations Smiley Happy


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 10 of 12
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.