Lowering Utilization and Smashing out of Debt

[Anonymous]

Hi...I'm new to this and did search for a while and I've read a good bit of the information and advice that people have. I'm mostly posting because taking these first steps towards killing my debt and recovering my score has given me a very positive feeling. My wife and I had some medical issues a few years ago that blew up my credit. Thats not to say that it was all out of my hands, being careless with my CC debt at the time was my fault, not the fault of any medical issue. I was close to 40k in debt at that time on my cards. Recently I've passed some time milestones that allowed my score to climb pretty significantly. I was at ~650 a year ago and today I see myself at 723. 

I currently have a mortgage and 3 credit cards. My current utilization is 87%, it was 98% in July. By the end of September I expect it to be closer to 10%. 

Cards:

1. APR 28.99% Limit $16600, balance $14131.23, utlization 85.1%

2. APR 24.99% Limit $1800, balance $1735.65, utlization 96.4%

3. APR 22.99% Limit $4500, balance $0, utilization 0%

Total CL $22900, total balance currently $15866.88, current total utilization 69.3%. I am paying off the $14131.23 bill this afternoon. I'll then roll the payments I was making to that card to the payment I'm making to the other card with a $1700 balance so that it is at $0 in ~6 months. That card won't truely be at 0% because I have a pair of accounts that autopay on it a month (netflix, etc). So I'll drop it to nearly $0 but it will see ~$40 in charges a month that I'll pay off. 

I'm hoping to see my score creep above 740 with this change, can anybody let me know what type of increase I might expect after paying off the 14k debt? 

Thanks for any insight and advice that is offered.

[Trudy]

Welcome to the forum RecoveringDavid.  Seems you've already done a great job tackling your debt.

If there are no derogs on your account you should see a significant increase in your score.  I can't quantify scores (others can).  But your plan will not only bring your overall UTL to within the lowest threshold for maximizing scores, you will also be bringing down your individual card UTL to below the lowest threshold for maximizing scores.  In addition, you will no longer be reporting a balance on more than one card which also helps with maximizing scores.  I see 740+ easily under these circumstances.

With your research on the forum did you find the UTL thresholds?  That is helpful knowing those "breakpoints" when monitoring your scores and it's impact on your profile as each profile may vary. Also, the recurring charges on the one account will help ensure 1 card reports a balance as all zero balances produces a penalty.

Hope you and your wife are doing well now.  Good luck!

[AllZero]

Remember these thresholds: 8.9%, 28.9%, 48.9%, 68.9%, 88.9% Get your aggregate utility at or below 8.9%. Look into the All Zero Except One technique.

Aggregate utility-You should gain 10-15 points crossing a scoring threshold. You're probably looking at 40-60 or more available points if you can do AZEO.

Individual utility-You have two cards not at optimal utilization, 87% and 97%. Do AZEO and you possibly can gain more points. You have one card maxed out. So you're being penalized for that. I'm not quite sure on the points in that situation once you get your individual to optimization.

[FlaDude]

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@Anonymous wrote:

That card won't truely be at 0% because I have a pair of accounts that autopay on it a month (netflix, etc). So I'll drop it to nearly $0 but it will see ~$40 in charges a month that I'll pay off. 

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Congrats on your progress so far, it does feel good to get those balances down. Great advice upthread already. As mentioned, from an AZEO standpoint, letting a small balance report on one card is good. If you have auto charges on more than one card, you can pay the balance before the statement date to have a card report zero even if you've used it during the month.

[Anonymous]

Once that ~$14k payment reports you'll be sitting at under 8.9% aggregate utilization.  That means you will have crossed 4 aggregate utilization thresholds.  Each should be good for at least 10 points, maybe 15 for the final threshold, so my guess would be a gain of 45 points to your Fico 8 scores.  As an aside, you've probably got another 10-15 points on the table due to that final revolver sitting at maxed out utilization, which would be acquired if you were to take it down below 28.9% utilization.

[Anonymous]

bump from Sept. 

Trying to maintain, so if you "cross" 3 thresholds on a single card for example, you get a bump for each threshold?

So if you had a card with a $1000 limit and were at $950 bal and brought it to $0, you crossed 5 thresholds, theres a bump for each, for 2 cards with the same, you paid em both off, thats good for 10 bumps in points, and assuming you only have 2 cards and dropped to $0, your UTI also crosses 5 thresholds?  

Ive been researching this and cant find anything definitive on crossing multiple thresholds for point bumps.

[donkort]

Obviously, you should pay off the $1,700 card as well.  Then,  your utilization will be minimal.  

If you have no derogs, I see 740 as being very much within reach.  

I recently paid off $40,000 in credit card debt.  My scores have went up from the 660s-680s to the 750s-760s.  And my utilization is still 13% for two credit bureaus, 7% for another.

Congratulations for paying off that big card!

[SouthJamaica]

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@Anonymous wrote:

Hi...I'm new to this and did search for a while and I've read a good bit of the information and advice that people have. I'm mostly posting because taking these first steps towards killing my debt and recovering my score has given me a very positive feeling. My wife and I had some medical issues a few years ago that blew up my credit. Thats not to say that it was all out of my hands, being careless with my CC debt at the time was my fault, not the fault of any medical issue. I was close to 40k in debt at that time on my cards. Recently I've passed some time milestones that allowed my score to climb pretty significantly. I was at ~650 a year ago and today I see myself at 723. 

I currently have a mortgage and 3 credit cards. My current utilization is 87%, it was 98% in July. By the end of September I expect it to be closer to 10%. 

Cards:

1. APR 28.99% Limit $16600, balance $14131.23, utlization 85.1%

2. APR 24.99% Limit $1800, balance $1735.65, utlization 96.4%

3. APR 22.99% Limit $4500, balance $0, utilization 0%

Total CL $22900, total balance currently $15866.88, current total utilization 69.3%. I am paying off the $14131.23 bill this afternoon. I'll then roll the payments I was making to that card to the payment I'm making to the other card with a $1700 balance so that it is at $0 in ~6 months. That card won't truely be at 0% because I have a pair of accounts that autopay on it a month (netflix, etc). So I'll drop it to nearly $0 but it will see ~$40 in charges a month that I'll pay off. 

I'm hoping to see my score creep above 740 with this change, can anybody let me know what type of increase I might expect after paying off the 14k debt? 

Thanks for any insight and advice that is offered.

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No one knows how many points, but you can definitely expect a substantial gain. 740 is not at all out of reach.

[Anonymous]

@Anonymous You should’ve started a new thread, they’re responding to last year‘s post.

To answer your question, no the individual breakpoints start at 28.9% it is believed, whereas aggregate starts at 8.9%.

There is a bump at each aggregate. It’s not really known whether you get much when you have multiple individuals over breakpoints until the last and highest remaining crosses.

In other words some people believe individual goes by the highest individual utilized card. And they’re very well could be additional penalties for multiple cards with higher utilization.

I suggest you read the thread by ABCD2199 the real truth about utilization.

[Anonymous]

Congratulations on your success so far! Remember those util thresholds AllZero posted above. For maximum benefit, you'd want to keep your aggregate utilization below 8.9%