High Utilization vs Accounts with Balances FICO Score Impact

[Iusedtolurk]

Hello people,

Just looking for some thoughts on which move would have more impact on score in this scenario.

11 accounts High Balance vs # of accounts with balances.

Have about 1000$ to put towards amounts.

1. Would it be more beneficial to scoring if the $1000 was used to zero out lowest 5 accounts so that 5 accounts have high balances but 6 would be zero?

2. Would it be more beneficial to scoring if the $1000 was used to bring down the high utilization of the 5 highest card utilizations which would leave 10 accounts with balances?

Not trying to obtain any new credit or purchase anything big in the near future just seeing which move would have a more positive effect on score.

So bottom line answer would be generally in any situation does high utilization have more of a negative score effect than # of accounts with balances or vice versa.

11 accounts

OWE

CREDIT LIMIT

UTILIZATION

(1)

$771

$950

81.16%

(2)

$1,033

$1,300

79.46%

(3)

$540

$701

77.03%

(4)

$960

$1,350

71.11%

(5)

$517

$750

68.93%

(6)

$204

$500

40.8%

(7)

$346

$1,000

34.6%

(8)

$201

$600

33.5%

(9)

$222

$1,000

22.2%

(10)

$98

$1,200

8.17%

(11)

$0

$250

0%

Total

$4,892

$9,601

50.95%

[CreditInspired]

Hi and welcome to myFICO

Kudos to you for realizing that you need to get your balances down and want to use $1K toward that goal.

Usually, it's best to have less than half your cards reporting a balance; however, since a lot of your cards are very close to being maxed out, can you provide us with the APR for each cards and this will help us to steer you in the right direction. If there are 0% promos on any of the cards, please provide us with the expiration date too.

Thanks

[Iusedtolurk]

---

@CreditInspired wrote:

Hi and welcome to myFICO

Kudos to you for realizing that you need to get your balances down and want to use $1K toward that goal.

Usually, it's best to have less than half your cards reporting a balance; however, since a lot of your cards are very close to being maxed out, can you provide us with the APR for each cards and this will help us to steer you in the right direction. If there are 0% promos on any of the cards, please provide us with the expiration date too.

Thanks

---

Hi thanks for responding.

On average all the cards fall inbetween 24-26 apr.

No zero promos.

Never really paid any attention to credit up until a little over a year ago but have been learning a lot since.

Credit was shabby bottom 500s now close to middle 600s.

Didn't have any cards or installments just some charge offs and  collections so I started with bottom feeders (anyone who would get my foot in the door).

Now

0 baddies TU

1 baddie EQ due to fall off in a couple months

1 baddie EX same

Subprime life but it helped get me on the road. Just got a Discover last month so that says. "Hey you're a lot better creditwise than you were"

Planning on easing down this road and initial goal is to have 740+ in a year.

[Remedios]

Hi and welcome to the forums

If you're really trying to improve your credit, first thing you need to do is stop thinking in terms of scoring and start thinking about your finances. Adjusting payments to appease scoring model doesnt really help you.
Whatever extra money you have, pay the cards with highest interest first.
Even if all APRs are high, keep paying the most on the ones with highest balances because you're bleeding money on interest payments.
Your finances should always come before scoring. Once finances are in order, scoring increase will happen naturally.

Good luck!

[Kforce]

---

@Remedios wrote:
Hi and welcome to the forums

If you're really trying to improve your credit, first thing you need to do is stop thinking in terms of scoring and start thinking about your finances. Adjusting payments to appease scoring model doesnt really help you.
Whatever extra money you have, pay the cards with highest interest first.
Even if all APRs are high, keep paying the most on the ones with highest balances because you're bleeding money on interest payments.
Your finances should always come before scoring. Once finances are in order, scoring increase will happen naturally.

Good luck!

---

+ 100

[tcbofade]

Hello.  First, Remedios is absolutely correct.  

That said, if raising your score is the goal, high utilization is a killer.

Make larger payments on accounts one through five to bring each individual account under 68% utilization.  (Make sure you factor in the next months interest...)  Rough numbers, Account #1 needs a payment of $125.  (plus whatever the next months interest will be).  #2 needs a payment of $149 plus following interest, #3 needs a payment of $63, #4 needs $42, and #5 needs $7.

Without interest, that's $386 dollars and when EVERY one of them reports to the CRAs with new balances UNDER 69%, you'll see a nice Fico boost.

...spend the other $600 starting from the bottom and paying balances off.

[Iusedtolurk]

---

@tcbofade wrote:

Hello.  First, Remedios is absolutely correct.  

That said, if raising your score is the goal, high utilization is a killer.

Make larger payments on accounts one through five to bring each individual account under 68% utilization.  (Make sure you factor in the next months interest...)  Rough numbers, Account #1 needs a payment of $125.  (plus whatever the next months interest will be).  #2 needs a payment of $149 plus following interest, #3 needs a payment of $63, #4 needs $42, and #5 needs $7.

Without interest, that's $386 dollars and when EVERY one of them reports to the CRAs with new balances UNDER 69%, you'll see a nice Fico boost.

...spend the other $600 starting from the bottom and paying balances off.

---

Appreciate all the input and agree with all. I know I have learned a huge amount and always happy to learn more. I know the basics of limiting hp inquiries, not over extending, keeping util below single digits, having less than half accounts reporting balances, sub-prime vs prime, pif, and all the other variables for great credit attainment.

Right now I have no major things in the works for the near future so I am just enjoying the little increases in scores happening when I do certain things. 

@tcbofade answer was just what I was looking for in my particular short term thoughts. In the long term I have a pretty good idea the behavior which will result in higher gains.

I'll be more than happy later on getting into the middle or higher 700s not even thinking about walking that narrow line of perfection to get into the 800s. (but if somehow I ever do get it I will revive this post and be like...I used to think yada yada yada..)

Some of these things people go through like making one wrong move and losings major points, forgetting a card in the sock draw and getting a CLD or closure, running up a card balance to high and then receiving AA, I saw one post where a guy had perfect payments took out a Cash Advance and got his Credit line reduced from @16000 to a 1000. You know what happens when you lose CLs UTILs go up other creditors get spooked and calamity could follow. 

This credit stuff is a dangerous thing if you don't watch it carefully.

So I choose to have fun with it with goals to get a stable very good rating not too bad not the perfection.

At least until I need to sharpen up for a major purchase then I will azeo my butt off, make sure th AoYA is over a couple years and etc etc.

One thing though I like sharing the knowledge I have acquired with those who need it on the forum and will continue to do so.

[SouthJamaica]

---

@Iusedtolurk wrote:

Hello people,

Just looking for some thoughts on which move would have more impact on score in this scenario.

11 accounts High Balance vs # of accounts with balances.

Have about 1000$ to put towards amounts.

1. Would it be more beneficial to scoring if the $1000 was used to zero out lowest 5 accounts so that 5 accounts have high balances but 6 would be zero?

2. Would it be more beneficial to scoring if the $1000 was used to bring down the high utilization of the 5 highest card utilizations which would leave 10 accounts with balances?

Not trying to obtain any new credit or purchase anything big in the near future just seeing which move would have a more positive effect on score.

So bottom line answer would be generally in any situation does high utilization have more of a negative score effect than # of accounts with balances or vice versa.

11 accounts

OWE

CREDIT LIMIT

UTILIZATION

(1)

$771

$950

81.16%

(2)

$1,033

$1,300

79.46%

(3)

$540

$701

77.03%

(4)

$960

$1,350

71.11%

(5)

$517

$750

68.93%

(6)

$204

$500

40.8%

(7)

$346

$1,000

34.6%

(8)

$201

$600

33.5%

(9)

$222

$1,000

22.2%

(10)

$98

$1,200

8.17%

(11)

$0

$250

0%

Total

$4,892

$9,601

50.95%

---

In my experience your FICO 8's would benefit most by reducing your highest percentage utilization card(s), while your mortgage scores would benefit most by zeroing out the low balance cards.

[Iusedtolurk]

---

@SouthJamaica wrote:

---

@Iusedtolurk wrote:

Hello people,

Just looking for some thoughts on which move would have more impact on score in this scenario.

11 accounts High Balance vs # of accounts with balances.

Have about 1000$ to put towards amounts.

1. Would it be more beneficial to scoring if the $1000 was used to zero out lowest 5 accounts so that 5 accounts have high balances but 6 would be zero?

2. Would it be more beneficial to scoring if the $1000 was used to bring down the high utilization of the 5 highest card utilizations which would leave 10 accounts with balances?

Not trying to obtain any new credit or purchase anything big in the near future just seeing which move would have a more positive effect on score.

So bottom line answer would be generally in any situation does high utilization have more of a negative score effect than # of accounts with balances or vice versa.

11 accounts

OWE

CREDIT LIMIT

UTILIZATION

(1)

$771

$950

81.16%

(2)

$1,033

$1,300

79.46%

(3)

$540

$701

77.03%

(4)

$960

$1,350

71.11%

(5)

$517

$750

68.93%

(6)

$204

$500

40.8%

(7)

$346

$1,000

34.6%

(8)

$201

$600

33.5%

(9)

$222

$1,000

22.2%

(10)

$98

$1,200

8.17%

(11)

$0

$250

0%

Total

$4,892

$9,601

50.95%

---

In my experience your FICO 8's would benefit most by reducing your highest percentage utilization card(s), while your mortgage scores would benefit most by zeroing out the low balance cards.

---

Good to know..very interesting points.

[Anonymous]

Remedios and SJ are on point.