How much does 1 card @ High Util hurt?

[Anonymous]

I have one Best Buy card with a $2000 limit and $1700 dollars on it - It's at 0% interest until June of 2009, so it is the last one I've paid attention to.   I have one other card with a $300 balance on a $5000 CL.  Every other card I use is PIF every month.

My total utilization is about 4%, but obviously with this one card it's 85%.   Am I better off not PIF some items and cutting that one down, or can I let it be?  I like the idea that it's not 'costing' me any interest for so long,... but now I wonder if it's costing me a fair number of points?

My current scores are:

TU: 685, EQ: 730, EXP: 688

I have some new CC apps that haven't hit yet, as well as new cards that should even decrease total utilization, but again... concerned about high util. on this one card.

thanks in advance for any advice!

sovi

[Anonymous]

I can only answer this anecdotally.

I went from 42% to 2% on one card and from 49% to 9% on another from one month to the next.  During that same time my overall utilization went from 6% to 4%.

This was good for 16 points on EX.  If you are at 85% on one card, it is likely costing you more than that, since that is considered maxed out.

Since FICO doesn't know or care about the interest rates on your cards, taking full advantage of extended 0% offers can often be a score killer.  Only you can decide which is more important, but unless you are applying for anything major anytime soon, saving money on interest usually trumps any FICO considerations.

[RobertEG]

When you decide to pay down the high %util, low interest card depends upon when you need to use your FICO score for something more than vanity.  If you are not planning to apply for new credit in the immedate future, follow a plan that leads to min. interest, and not a plan to maxmimixe FICO monthly.  As Yogi Berra, would say, you only need FICO when you need it!

[Anonymous]

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RobertEG wrote:

When you decide to pay down the high %util, low interest card depends upon when you need to use your FICO score for something more than vanity.  If you are not planning to apply for new credit in the immedate future, follow a plan that leads to min. interest, and not a plan to maxmimixe FICO monthly.  As Yogi Berra, would say, you only need FICO when you need it!

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Well, sort of.  (And, yes, what I'm about to say is going to contradict what I said in my post above.)

It is MOSTLY true that you only need FICO when you need it, but not entirely.

Remember that many creditors do periodic account reviews.  If you have 85% utilization on a card and don't seem to be making much progress paying it off, whether that is deliberate due to a 0% APR or because you are actually struggling to pay it off, many creditors will see that during their account reviews and possibly take adverse action and jack your rate or lower your CL or even unilaterally close whatever card or cards you have with them altogether.

Message Edited by cheddar on 03-26-2008 11:29 PM

[Anonymous]

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cheddar wrote:

It is MOSTLY true that you only need FICO when you need it, but not entirely.

Remember that many creditors do periodic account reviews.  If you have 85% utilization on a card and don't seem to be making much progress paying it off, whether that is deliberate due to a 0% APR or because you are actually struggling to pay it off, many creditors will see that during their account reviews and possibly take adverse action and jack your rate or lower your CL or even unilaterally close whatever card or cards you have with them altogether.

_________________________________________________________________

Definately something to think about.   With the Fed lowering the interest rates, my new savings account is now earning only 2.2%...(it was 4.5% only two months ago!) -

 maybe there's an argument to just pay off soon, and see what happens.  yes, it would cost me a little more money.. but would ease the wondering and totally erase the possibility that 18 mo. from now I'm in a different situation and *can't* pay it off.  Who knows with this economy!

Thanks sooo much for the advice/thoughts.

Sovi

[Anonymous]

I don't know if I'll ever understand their scoring system. I have a BK on mine from 2005 and was on my way with 1 CC to building back up and hit 630 on my TU. Now, I have that same card with about $1600 on a CL of $5,000, with another CC with $900 on an $8,000 CL and another Cap1 card with $140 on a CL of $2000. I also have 2 cards that I am an authorized user on, 1 with a $1600 balance on a CL of $2000 and another that I had when I declared BK which I do not use but the owner on that card has it at it's max with $3,000. Maybe that card is the one killing my score but I'm down to 566 on my TU score. The whole system is so convoluted I am just going to continue to pay down my cards and hope for the best. Maybe I should get my name off of the maxed out card but I am not sure how that is done. any thoughts???? 

[Anonymous]

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Mart_In_CT wrote:

I don't know if I'll ever understand their scoring system. I have a BK on mine from 2005 and was on my way with 1 CC to building back up and hit 630 on my TU. Now, I have that same card with about $1600 on a CL of $5,000, with another CC with $900 on an $8,000 CL and another Cap1 card with $140 on a CL of $2000. I also have 2 cards that I am an authorized user on, 1 with a $1600 balance on a CL of $2000 and another that I had when I declared BK which I do not use but the owner on that card has it at it's max with $3,000. Maybe that card is the one killing my score but I'm down to 566 on my TU score. The whole system is so convoluted I am just going to continue to pay down my cards and hope for the best. Maybe I should get my name off of the maxed out card but I am not sure how that is done. any thoughts???? 

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Here's the rundown:

Card 1: $1600 / $5000 = 32%

Card 2: $900 / $8000 = 11%

Card 3: $140 / $2000 = 7%

Card 4: $1600 / $2000 = 80% (AU Card)

Card 5: $3000 / $3000 = 100% (AU Card)

Overall: $7240 / $20K = 36%

Your overall utilization is not terrible but it could be better.  The two AU cards are KILLING your score, though.

Also, all of your accounts have a balance, which is not good.  FICO will ding you if more than half of your open accounts have a balance.

Have the primary cardholder(s) on your AU Cards remove your AU-ship.  Ask the CCCs to remove the accounts from your credit reports.  Removing an AU account is very easy.

Additionally, pay two of the other three reporting cards down to $0, and let the other one report a small balance.  You'll be amazed at the score boost you can get by doing this.

Message Edited by cheddar on 03-27-2008 10:34 AM

[Anonymous]

Hey thanks a lot for the info and the breakdown. This helps a lot and I will get my name off the AU card that is maxed out. The other AU card is my debt and I will work to pay that down along with the rest. I hope by June this year to have most of my balances at zero except for the AU card that has $1600 on it. If all goes according to your plan I should get a nice bump up on my Fico score later this year. Again thanks for that breakdown and the explanation.

Marty

[Anonymous]

when i did a bt on one card, it raise my overall util from 2 % to 14 %, and from 0% to 82% on one card. My score went down 42 points...erhh...but its slowly coming back up and in 4 months, when it's paid off i'll be golden.