Lower UTIL for a boost. Need Advice

[Anonymous]

I've posted before about how I need a 7pt-30pt boost in my mid mortgage fico. I tried goodwill letters with the 2 lates and a short sale to fall off in a the fall. EX and TU said to call them Aug 1st to ask for an early removal of the shortsale. 

I can pay down my debts to see if that will boost my score. One loan officer said to pay $4000 towards the car but I'd rather pay down high interest rate cards first and get all accounts under 30% util.

Here's my breakdown. Experts!, please let me know if this should help or if I should allocate funds elsewhere. We are in escrow right now and my mid score is 673. To get a much better rate, I need to be above a 680 (it would be awesome if I could get to 700).

[Anonymous]

Not an expert yet but I’d divert an extra $147 out of your proposed Chase auto payment to the Amex and pay it off. That’d give you AZEO on the cards and wouldn’t make your loan much higher in utilization, and you’d still be below 30% on everything.

[AndySoCal]

As far as the FICO score and and credit utilization is related to  revolving  accounts (Credit cards) rather than installment. I would focus on getting your credit card utilization under 10% on all cards. Secondly, use the FICO score simulator to give you an idea if did  pay those debits down approximate amount of the score change.

 Below is a link to an article on FICO score and credit utilization

Credit Utilization

[Anonymous]

The HIUSA is a LOC. Should I still pay off the Amex?

I was trying to do the AZEO method. I think you may be right being that the LOC may report as a revolving account.

[AndySoCal]

I would pay it off as other(s) have suggested.

[SouthJamaica]

In my opinion you'll get more mileage in your mortgage scores from reducing your revolving debt than from reducing your installment debt.

[HeavenOhio]

@Anonymous, fully paying off your auto loan could backfire. It's likely to lower your FICO8 scores substantially (by 30 points possibly). What it'll do to or for your mortgage scores is much less clear.

However, it's very clear that paying down your revolving debt would help. I think your plan to bring each of your revolving accounts to "below 30%" is good, but I'd make it 27% or below. That's because "below 30%" actually means 28.9% or below. 29.000001% rounds up to 30% and is no longer below 30%. Paying to 27% ensures that the next month's interest won't bump you over the scoring threshold.

Having said that, I'd go further and do AZEO, i.e. pay down all revolving accounts to zero except one, with the remaining account having a tiny balance (at least $5 but not much more than that). It's better that the small balance be on a card rather than the LOC, though, and I'm not clear if you have the funds to pay to AZEO that way.

If you can't do AZEO, I think I'd pay off all cards except for one with a tiny balance, and get the LOC down as far as you can. With the loan, simply continue to make on-time payments.

I'd take the $3,000 from your proposed loan payment and divert it toward the LOC. That brings your overall revolving utilization safely below 8.9%, which is generally considered optimum. And it brings your individual revolving account utilization below 28.9%, which is also generally considered optimum. And it leaves you with two of six revolving accounts with positive balances, which is good, and depending on how FICO treats your profile, may possibly be the same as leaving a balance on only one account.

[Thomas_Thumb]

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@Anonymous wrote:

I've posted before about how I need a 7pt-30pt boost in my mid mortgage fico. I tried goodwill letters with the 2 lates and a short sale to fall off in a the fall. EX and TU said to call them Aug 1st to ask for an early removal of the shortsale. 

I can pay down my debts to see if that will boost my score. One loan officer said to pay $4000 towards the car but I'd rather pay down high interest rate cards first and get all accounts under 30% util.

Here's my breakdown. Experts!, please let me know if this should help or if I should allocate funds elsewhere. We are in escrow right now and my mid score is 673. To get a much better rate, I need to be above a 680 (it would be awesome if I could get to 700).

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Not sure if the HI USA FCU is a credit card or loan/LOC. Assuming it is not a credit card, I agree you should report a small balance on your AMEX-11000.

 I do think it is good to get your loan below 30% but, otherwise I'd go with standard monthly payments at this time. My guess is interest rate on a Chase Auto loan is quite a bit less than APR on carryover balances on CCs.

A potential payment example is provided below. Nothing special about the exact amounts. If HI USA FCU is a credit card, then reallocate $147 of the Chase Auto payment to the AMEX-11000 to pay balance to zero so only one CC is reporting a balance. The key threshold for revolving UT is under 29% on an individual card basis NOT under 30%. Also for all revolvers combined you want aggregate utilization under 9%

Account Description	CL or Loan	Balance	UT%	Payment	New Bal	New UT%
HI USA FCU	$30,000	$11,543	38.5%	$4,250	$7,293	24.3%
AMEXD	$6,000	$0	14.4%	$0	$0	0.0%
* AMEX-11000	$13,500	$1,947	0.0%	$1,800	$147	1.1%
Barclays	$15,000	$0	35.5%	$0	$0	0.0%
Chase Auto	$21,823	$7,747	0.0%	$1,800	$5,947	27.3%
Citicard	$11,000	$2,638	24.0%	$2,638	$0	0.0%
Credit One	$400	$0	0.0%	$0	$0	0.0%

[HeavenOhio]

@Thomas_Thumb, the OP indiates in post #4 that the HI USA FCU account is a LOC.

[Thomas_Thumb]

OK - I see that now.

So I'd suggest the OP stick with leaving a small balance on the AMEX to be safe.