FICO question - which is better?

[kroberts67]

I'm trying to help out a friend make the best move with where to apply her money.  Is it better have 2 cards report maxed out and have only those report, or to pay them down a little so they aren't maxed and have 5-7 other cards with low UT report but not have those 2 maxed out so badly?  

I'm advising her to pay where there is the highest APR first and I'm sure she'll go that route, but my question is in regards to which looks better/worse as far as FICO scoring.

TIA  

[Anonymous]

Without a doubt she will be hammered worse for having two cards completely maxxed out.

The two factors you are asking us to compare (in the two different scenarios) are:

(1)  % Utilization for each credit card considered separately

(2)  number of CC's with a nonzero balance

In both scenarios (as you describe them) the total credit card utilization is the same.

#1 hurts you much more than #2, if the scenario means having cards close to being maxxed out.  If the scenario did not mean that (if all her two cards were at < 50%, for example) then it's conceivable (???) that the best approach might be to strive for more zero balances but higher U on a couple cards.  But as you have descrbed the two scenarios, it is better by far to avoid two maxxed out cards.

[Thomas_Thumb]

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@kroberts67 wrote:

I'm trying to help out a friend make the best move with where to apply her money.  Is it better have 2 cards report maxed out and have only those report, or to pay them down a little so they aren't maxed and have 5-7 other cards with low UT report but not have those 2 maxed out so badly?  

I'm advising her to pay where there is the highest APR first and I'm sure she'll go that route, but my question is in regards to which looks better/worse as far as FICO scoring.

TIA  

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If cards are over 90% - which is what I would consider a percentage where score impact is significant, then dropping balance on these to under 80% and picking up the difference on 2 or 3 other cards will help score. Not sure on the 5 to 7 card scenerio requirement. If all cards are allowed to post a balance that can be a major hit as well.

Note: If the cards are less than 80%, they are not maxed out.

Your advice is good. Score is not too important if you don't need new credit. Best to get finances in order and stop the bleeding associated with high interest payments - shift burden to lower APR cards..