Impact of High Utilization on FICO score

[Anonymous]

EQ- 786

TU- 773

EX- 736 (Lender pull)

Scores are based on current utilization of 7.7% as of December 1, 2009 ( last reported data)

As of 12/26/2009 my current utilization is 55%, (Christmas and car repairs).  How much do you think my scores will go down based on the increase in utilization.  I do have the cash to pay them down, except right after Jan 1, I will have property tax bills clearing my bank. I know this next strategy is strange but would it be worth it to pay the balances down before Jan 1 and then after Jan 1 take a cash advance to cover my property taxes.  Then I have until Feb 1 to pay down the balances again.  I have come a long way on my scores in the last two to three years ( started in the 580s), so I am concerned at how big a hit my scores could take now.

Does it help much if I could get utilization under 50%?

[Anonymous]

Going from 7% uti to over 50% is probably going to cost you quite a few points. Nobody can say how many, but if I had to hasten a guess, I'd say 30 to 40 points. But, that's just a rough guess.

I get your reason for not wanting the high balances to report, but I don't think it's a good idea to plan on taking cash advances to pay your property tax bills. That'd turn out to be a disproportionately expensive endeavor, and could invite AA in and of itself. But, I'd be more concerned about the monetary losses than the FICO score losses.

Have you thought about paying your credit cards off (to avoid the interest) with the money in the bank, and taking an installment loan at a reasonable rate to pay your property tax bill?

[Anonymous]

As stated you will probably lose a good chunk of points but if you arent planning on applying for credit dont sweat it wait and pay them off Feb 1 and by March when your low utilization is reported again the points will come back.

[Anonymous]

thanks to both of you. That is some great advice.

Thanks again. I think I will look into the installment loan.

[haulingthescoreup]

If you're not applying for credit, it shouldn't be an issue, UNLESS some of your lenders soft you during this period and take AA, due to being alarmed at the sudden high balances.

I'd advise getting balances on each account down to under 50% anyway before they update, the lower the better. You'd think that banks wouldn't panic with high post-holiday balances, but they're all so twitchy these days that it's hard to know what they would think and do.