Credit utilization and effect on credit score

[mxml11]

Hi,

My overall utilization ratio is pretty good (14%) but I carry 3 credit cards with balance (due to previous balance transfer offers) and it is hurting my credit score (CC1 - 87%, CC2 - 68%, CC3 - 62%).

I have some extra capacity to cover some of that debt, so which would be my best course of action? Paying off the 62% card down to 49%? Or paying off the 87% card down to 71%? Which would have a better short term effect on my score?

Thanks!

[Rogue46]

I would pay down the 87% card first as it is effectively maxed out per the scoring model.

[pizzadude]

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@mxml11 wrote:

Hi,

My overall utilization ratio is pretty good (14%) but I carry 3 credit cards with balance (due to previous balance transfer offers) and it is hurting my credit score (CC1 - 87%, CC2 - 68%, CC3 - 62%).

I have some extra capacity to cover some of that debt, so which would be my best course of action? Paying off the 62% card down to 49%? Or paying off the 87% card down to 71%? Which would have a better short term effect on my score?

Thanks!

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Agree the highest utilization is probably the best place to start but you should also assess what this payment does to your overall utilization as this is another significant scoring factor.

[tcbofade]

That's a tough call... you're right on the line...

If you can get that 87% card under 69%, you'll see a nice score bump.

[Shooting-For-800]

I would get everything under 69% first.

Then 49% then 29%, etc.

GL!

[SouthJamaica]

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@mxml11 wrote:

Hi,

My overall utilization ratio is pretty good (14%) but I carry 3 credit cards with balance (due to previous balance transfer offers) and it is hurting my credit score (CC1 - 87%, CC2 - 68%, CC3 - 62%).

I have some extra capacity to cover some of that debt, so which would be my best course of action? Paying off the 62% card down to 49%? Or paying off the 87% card down to 71%? Which would have a better short term effect on my score?

Thanks!

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Welcome to the forum.

Get the CC1 down to 68%, then start getting the 3 of them down to 48%.

[CameAlongWay]

 Yeah all have to go anything over 29% hurts, I just opened 2 ballance transfer cards one is 90% one 69% ouch 50 point drop ccu is 15% but 1 maxed card really hurts.

[pizzadude]

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@CameAlongWay wrote:

 Yeah all have to go anything over 29% hurts, I just opened 2 ballance transfer cards one is 90% one 69% ouch 50 point drop ccu is 15% but 1 maxed card really hurts.

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This might be one of those "finances over FICOs" situations - if you're able to pay off debt at a much lower interest rate then it's worth the temporary hit to your scores. 

[Horseshoez]

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@pizzadude wrote:

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@CameAlongWay wrote:

 Yeah all have to go anything over 29% hurts, I just opened 2 ballance transfer cards one is 90% one 69% ouch 50 point drop ccu is 15% but 1 maxed card really hurts.

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This might be one of those "finances over FICOs" situations - if you're able to pay off debt at a much lower interest rate then it's worth the temporary hit to your scores. 

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It looks like @pizzadude beat me to the punch with the "Finances over FICO" comment.

@mxml11, are you planning on applying for a mortgage or another type of credit instrument?  If not, let your scores do what they will and follow the path for your best financial health.