FICO Simulator--When using under 30%, does paying off more really matter?

[Anonymous]

Aha. One card being over 88.9% could be the main dinger, as I now see from research. Unfortunately, I didn't know this before making the balance transfer. It's a CitiSimplicity with a 0% APR for 21 months. It seemed logical that I could make the most use out of that, because it would give me the most time...but I was thinking then that only the aggregate really mattered.

I have exactly 10 cards. I noticed that going from 5 to 6 (above 0), like you indicated, took away 13 more points...but I've already reversed that. It's about to go down to 4 (but that should be only 3 or 4 points). However, the one I'm paying off on Thursday is the second-highest balance (over 80%, but not 88.9%), so I'll see how much this affects it.

The maxed one is CitiSimplicity ($3400 limit, around $3300 utilized now). Another one is Chase Freedom Unlimited ($9600 limit)...it's right at the 28.9% mark. If I transferred from the first to the second, this would probably lessen the damage here...the Chase would still only be about half-utilized. But the drawbacks would be:

a) Another $150 or so in balance transfer fees

b) Only 15 months to pay the entire balance (instead of 21), before a 25.74% APR kicks in.

[Anonymous]

It’s not worth doing a shuffle if you’re not actively seeking new credit, just pay down your cards and your scores will recover. 

I would not shuffle balances just for a score increase as long as you’re not doing something like making minimum payments to some of your accounts and thus setting yourself up for AA by your creditors. 

[Anonymous]

Nope, nothing like that. I'm just playing a bit of Russian Roulette, because:

a) I'd like to refinance and/or trade in my car before a big repair is required (I drive for a living and rely on it). If not refinancing, a repair might have to be financed as well (it's a Prius).

b) I'm getting into real estate investing, and I'd like to maximize my options so I have the most flexibility when the market crash comes.

For both of these things, 700 is very beneficial. If either happened while stuck at 650, it could have a negative chain reaction (not necessarily with the FICO, but with personal finance and general goals).

[Anonymous]

Well then I would do the most optimal scoring payoff if you can. 

Pay down cards in order of utilization threshold. Thresholds are 28.9%, 48.9%, 68.9%, 88.9% - Pay all cards below 68.9% and then work on the next threshold while paying, say, 2.5-3x min on other cards (depends on the issuer - Chase and Amex don’t like revolvers so I would pay them more than I would a company like Discover or Capital One that like revolving balances). That will have the quickest score rebound. 

[Anonymous]

Interesting...so you're saying that Chase tends to frown upon people paying only the minimum, even with 0 APR? Does this mean AA is possible?

[Anonymous]

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@Anonymous wrote:

Interesting...so you're saying that Chase tends to frown upon people paying only the minimum, even with 0 APR? Does this mean AA is possible?

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Not just Chase, all lenders frown upon it in terms of risk assessment.  Paying only the minimum on a revolver (not an installment loan where it's expected) is a sign of elevated risk.  Paying even a few more dollars than the minimum is a best practice to make yourself appear less risky. 

[Anonymous]

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@Anonymous wrote:

Regarding aggregate utilization: I thought 8.9%-28.9% was all one range...and yes, it's always stayed in there. I've played obsessively with the utilization percentages, both aggregate and individual. But in my understanding, 5%, 15%, and 30% are not specifically thresholds.

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8.9% and 28.9% are both threshold points, thus they can't be in the same range if you're including those exact points.  The majority of the numbers between those book ends would be the same range, yes.  I did not state that those other percentages were thresholds, I was just picking points that were not right near the thresholds as to eliminate the chance of not knowing which range you were in.   

[Anonymous]

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@Anonymous wrote:

However, the one I'm paying off on Thursday is the second-highest balance (over 80%, but not 88.9%), so I'll see how much this affects it.

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You wouldn't expect to see a score increase at all related to that account, as the FICO algorithm looks at your highest individual account when imposing that penalty.  You're already taking the penalty for an account at > 88.9% utilization, so taking your second highest account down is not going to impact your highest utilization percentage account.  What it could impact though is aggregate utilization, so you'd have to figure your before/after overall utilization to see if paying down/off your second highest balance account would cause a threshold-crossing, which I believe would be 8.9% in your case if you're somewhere between 8.9% and 28.9%.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Regarding aggregate utilization: I thought 8.9%-28.9% was all one range...and yes, it's always stayed in there. I've played obsessively with the utilization percentages, both aggregate and individual. But in my understanding, 5%, 15%, and 30% are not specifically thresholds.

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8.9% and 28.9% are both threshold points, thus they can't be in the same range if you're including those exact points.  The majority of the numbers between those book ends would be the same range, yes.  I did not state that those other percentages were thresholds, I was just picking points that were not right near the thresholds as to eliminate the chance of not knowing which range you were in.   

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Right...I meant above the former and below the latter, so it's one range because it's between two threshold points.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Interesting...so you're saying that Chase tends to frown upon people paying only the minimum, even with 0 APR? Does this mean AA is possible?

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Not just Chase, all lenders frown upon it in terms of risk assessment.  Paying only the minimum on a revolver (not an installment loan where it's expected) is a sign of elevated risk.  Paying even a few more dollars than the minimum is a best practice to make yourself appear less risky. 

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So I guess companies do look at your specific accounts with them, especially when considering additional loans, credit increase requests, etc. But is minimum payment really grounds for AA, if they're always on time and your aggregate percentage stays low?