Minimal score increase after paying down CC

[K-in-Boston]

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@Doc203 wrote:

It only took me a min  - here you go:

Card	Bal	Credit Limit	Reported to	Authorized User
Chase	3426	3500	EQ	Yes
Sync/Walmart	3039	3800	All 3
Discover	5255	5500	All 3	Yes
Chase	33	3500	All 3
Am EX	1837	1950	All 3
Sam's Club	2955	3000	EQ	Yes
BP	0	2300	All 3
Chase	0	14400	EQ, EX	Yes
Amazon Store	9886	10000	All 3
Chase	6104	10000	All 3
Citi	2567	2690	All 3
Cap One	2065	2250	All 3	Yes
Cap One	0	8000	All 3
Ashley Furn	1390	4000	All 3
Cap One	1942	2050	EX	Yes

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Lots of replies while I was typing that!

Looks like you are at 53% utilization (rounded up) with 8 of 15 cards maxed out.

There is no guarantee that they would drop off of your reports without some additional work by you, but if you removed yourself from the red ones above, that would bring you down to 3 out of 10 maxed out and 43% overall utilization.  If you then brought the remaining maxed out ones down into the 80s at least, you should notice a bit more improvement.

Do your $14,400 Chase card or $8,000 CapOne have any balance transfer offers?

[Adkins]

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@Doc203 wrote:

It only took me a min  - here you go:

Card	Bal	Credit Limit	Reported to	Authorized User
Chase	2975	3500	EQ	Yes
Sync/Walmart	3039	3800	All 3
Discover	4675	5500	All 3	Yes
Chase	33	3500	All 3
Am EX	1658	1950	All 3
Sam's Club	2550	3000	EQ	Yes
BP	0	2300	All 3
Chase	0	14400	EQ, EX	Yes
Amazon Store	8500	10000	All 3
Chase	6104	10000	All 3
Citi	2286	2690	All 3
Cap One	1913	2250	All 3	Yes
Cap One	0	8000	All 3
Ashley Furn	1390	4000	All 3
Cap One	1743	2050	EX	Yes

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Yup, those maxed out cards are what's hurting you, regardless of having other cards at 0%. The one's I've bolded bring your utilization down to 85%, unmaxing those cards. I'd start there. 

[Doc203]

K-in and Adkins thanks for the help.

Both the $8k card and the $14k card I believe will allow for balance transfers. I think I will remove my self from those cards - all except for the $2050 Capital One - I just paid it off too. I am purchasing the property in November and am just trying to get the best score I can for that purchase. 

Thanks again

[Anonymous]

We do  not in fact know that the back-end FICO 8 algorithm is counting the particular AU card you mentioned as part of your utilization.  If they are not doing so, then paying down a huge amount on that card would not be expected to help your score.

FICO 8 has a secret "anti-abuse" module that behaves in unpredictable ways.  It can cause some or all AU cards to be ignore in util calculations.

PS.  The front end "summary" page of a credit monitoring tool (including CMTs made by Experian, myFICO, etc.) probably shows you your current CC utilization, and that CMT's calculation may or may not include your AU cards, but that has absolutely nothing to do with whether the back-end scoring algorithm does.  Determining whether a particular AU card is being considered by FICO 8 requires careful testing and most beginners won't know how to do that.

[iv]

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@Anonymous wrote:

We do  not in fact know that the back-end FICO 8 algorithm is counting the particular AU card you mentioned as part of your utilization.  If they are not doing so, then paying down a huge amount on that card would not be expected to help your score.

FICO 8 has a secret "anti-abuse" module that behaves in unpredictable ways.  It can cause some or all AU cards to be ignore in util calculations.

PS.  The front end "summary" page of a credit monitoring tool (including CMTs made by Experian, myFICO, etc.) probably shows you your current CC utilization, and that CMT's calculation may or may not include your AU cards, but that has absolutely nothing to do with whether the back-end scoring algorithm does.  Determining whether a particular AU card is being considered by FICO 8 requires careful testing and most beginners won't know how to do that.

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While all of that is true for FICO 8... OP mentioned that this is in preparation for a real-estate loan.

As such, AUs will count, as the older FICO models used for mortgage scoring do not exclude them.

OP should consider a one-off 3B MyFICO purchase, to get the EQ5/TU4/EX2 scores that will actually matter in this case.

[Anonymous]

Great catch, iv.  Thanks.  I may have missed that because it wasn't in the initial post.

[jamie123]

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@Doc203 wrote:

K-in and Adkins thanks for the help.

Both the $8k card and the $14k card I believe will allow for balance transfers. I think I will remove my self from those cards - all except for the $2050 Capital One - I just paid it off too. I am purchasing the property in November and am just trying to get the best score I can for that purchase. 

Thanks again

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Before you do anything...

You need to buy the 3 Bureau Scores here at MyFICO. It costs $60 but will give you about 21 real FICO scores. In these scores will be the mortgage scores. They are the scores that you are interested in and can vary a lot compared to the FICO 08 scores that you get here and elsewhere. Working to raise your FICO 08 scores in some cases can actually lower your mortgage scores. There are certain things that a mortgage score treats differently than a FICO 08 score.

The AZEO technique will get you the highest scores and the more that you vary from it, the more your scores will be nicked. AZEO means ALL ZERO EXCEPT ONE. That is, you would like to have all your cards report a $0 balance except one card that reports a balance that is less than 9% of its credit line. You are far from being able to use the AZEO technique so let's see what we can do.

• Any cards reporting more than 80% UTI are considered high risk and will raise red flags. (Probably over 50% on a manual review like a mortgage.)
• The mortgage scores don't like to see more than one card reporting a balance so you need to pay off as many cards as you can to $0.

So, pull your scores, pay cards down to less than 80% UTI and pay as many cards to $0 as you can.

IMHO you have way too much credit card debt to be considering a mortgage at this time unless you and your spouse are high earners. Have you done your DTI calculations? You need to meet the lender's debt to income ratio or you will have a VERY hard time getting a loan.

Good luck!

[dynamicvb]

I'm by far any type of expert here, but from what I've seen in my own experience and from reading the forums, an AU account does not have the same weight as a normal tradeline in terms of scores, improvements declines. For me when I had no credit cards reporting, then I saw this first hand. My wife got a card and added me as an AU. When it reported she got a 53 point jump, but I only got a 17 point as an AU. Our files are pretty much identical as we have always done joint accounts for credit. We reversed it and I got a card and added here. The gains were not as much as the first one, but the percentages between what I got and she got as an AU where pretty close.

I do agree with everyone else that your total utilization is just too high and you probably won't see many gains until that gets lower.

Just an FYI and your mileage may not even be close to the same.

[Thomas_Thumb]

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@Doc203 wrote:

K-in and Adkins thanks for the help.

Both the $8k card and the $14k card I believe will allow for balance transfers. I think I will remove my self from those cards - all except for the $2050 Capital One - I just paid it off too. I am purchasing the property in November and am just trying to get the best score I can for that purchase. 

Thanks again

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Not sure what your options are going forward for paydown. Key points for improved mortgage score from where you are now include:

1) Reducing aggregate utilization to under 29%,

2) Reducing individual card utilizations to under 49% each or under 69% as a start and

3) Reducing # cards reporting balances.

Dropping a majority of the AU cards is a good idea followed by paydown of your cards. See below tables for one approach.

After removal of highly utilized AU cards. 

Card	Bal	Credit Limit	UT%	Reported to	AU
Sync/Walmart	$3,039	$3,800	80%	All 3
Chase	$33	$3,500	1%	All 3
Am EX	$1,658	$1,950	85%	All 3
BP	$0	$2,300	0%	All 3
Chase	$0	$14,400	0%	EQ, EX	Yes
Amazon Store	$8,500	$10,000	85%	All 3
Chase	$6,104	$10,000	61%	All 3
Citi	$2,286	$2,690	85%	All 3
Cap One	$0	$8,000	0%	All 3
Ashley Furn	$1,390	$4,000	35%	All 3
All Combined	$23,010	$60,640	38%	N/A

After subsequent additional paydown

Card	Bal	Paydown	New Bal	Credit Limit	UT%
Sync/Walmart	$3,039	$1,200	$1,839	$3,800	48.4%
Chase	$33	$33	$0	$3,500	0.0%
AM EX	$1,658	$1,658	$0	$1,950	0.0%
BP	$0	$0	$0	$2,300	0.0%
Chase	$0	$0	$0	$14,400	0.0%
Amazon Store	$8,500	$4,000	$4,500	$10,000	45.0%
Chase	$6,104	$1,250	$4,854	$10,000	48.5%
Citi	$2,286	$1,000	$1,286	$2,690	47.8%
Cap One	$0	$0	$0	$8,000	0.0%
Ashley Furn	$1,390	$0	$1,390	$4,000	34.8%
All Combined	$23,010	$9,141	$13,869	$60,640	22.9%

Another approach if you have less funds is to still get aggregate utilization under 29%. Also shoot for under 69% card utilization on all cards but, further reduce # cards reporting balances to under 50%. 

Alternate subsequent additional paydown

Card	Bal	Paydown	New Bal	Credit Limit	UT%
Sync/Walmart	$3,039	$600	$2,439	$3,800	64.2%
Chase	$33	$33	$0	$3,500	0.0%
AM EX	$1,658	$1,658	$0	$1,950	0.0%
BP	$0	$0	$0	$2,300	0.0%
Chase	$0	$0	$0	$14,400	0.0%
Amazon Store	$8,500	$1,800	$6,700	$10,000	67.0%
Chase	$6,104	$600	$5,504	$10,000	55.0%
Citi	$2,286	$600	$1,686	$2,690	62.7%
Cap One	$0	$0	$0	$8,000	0.0%
Ashley Furn	$1,390	$1,390	$0	$4,000	0.0%
All Combined	$23,010	$6,681	$16,329	$60,640	26.9%

I think either of the above have the potential of increasing your mortgage score by 50 points, if your file is clean. The mortgage models, particularly EQ, don't like it when a majority of cards are reporting balances.

[Doc203]

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@Thomas_Thumb wrote:

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@Doc203 wrote:

K-in and Adkins thanks for the help.

Both the $8k card and the $14k card I believe will allow for balance transfers. I think I will remove my self from those cards - all except for the $2050 Capital One - I just paid it off too. I am purchasing the property in November and am just trying to get the best score I can for that purchase. 

Thanks again

---

Not sure what your options are going forward for paydown. Hey points for improved mortgage score from where you are now include:

1) Reducing aggregate utilization to under 29%, individual card utilizations to under 49% each and reducing # cards reporting balances. Dropping a majority of the AU cards is a good idea followed by paydown of your cards. See below tables for one approach.

After removal of highly utilized AU cards. 

Card Bal Credit Limit UT% Reported to AU Sync/Walmart $3,039 $3,800 80% All 3   Chase $33 $3,500 1% All 3   Am EX $1,658 $1,950 85% All 3   BP $0 $2,300 0% All 3   Chase $0 $14,400 0% EQ, EX Yes Amazon Store $8,500 $10,000 85% All 3   Chase $6,104 $10,000 61% All 3   Citi $2,286 $2,690 85% All 3   Cap One $0 $8,000 0% All 3   Ashley Furn $1,390 $4,000 35% All 3   All Combined $23,010 $60,640 38% N/A  

After subsequent additional paydown

Card Bal Paydown New Bal Credit Limit UT% Sync/Walmart $3,039 $1,200 $1,839 $3,800 48.4% Chase $33 $33 $0 $3,500 0.0% AM EX $1,658 $1,658 $0 $1,950 0.0% BP $0 $0 $0 $2,300 0.0% Chase $0 $0 $0 $14,400 0.0% Amazon Store $8,500 $4,000 $4,500 $10,000 45.0% Chase $6,104 $1,250 $4,854 $10,000 48.5% Citi $2,286 $1,000 $1,286 $2,690 47.8% Cap One $0 $0 $0 $8,000 0.0% Ashley Furn $1,390 $0 $1,390 $4,000 34.8% All Combined $23,010 $9,141 $13,869 $60,640 22.9%

Another approach if you have less funds is to still get aggregate utilization under 29%. Also shoot for under 69% card utilization on all cards but, further reduce # cards reporting balances to under 50%. 

Alternate subsequent additional paydown

Card Bal Paydown New Bal Credit Limit UT% Sync/Walmart $3,039 $600 $2,439 $3,800 64.2% Chase $33 $33 $0 $3,500 0.0% AM EX $1,658 $1,658 $0 $1,950 0.0% BP $0 $0 $0 $2,300 0.0% Chase $0 $0 $0 $14,400 0.0% Amazon Store $8,500 $1,800 $6,700 $10,000 67.0% Chase $6,104 $600 $5,504 $10,000 55.0% Citi $2,286 $600 $1,686 $2,690 62.7% Cap One $0 $0 $0 $8,000 0.0% Ashley Furn $1,390 $1,390 $0 $4,000 0.0% All Combined $23,010 $6,681 $16,329 $60,640 26.9%

I think either of the above have the potential of increasing your mortgage score by 50 points, if your file is clean. The mortgage models, particularly EQ, don't like it when a majority of cards are reporting balances.

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Thomas - excellent info... thanks! I can pull off either one of those scenario's, and probably do it this month. Outside of high utilization I don't have any bad maks on my credit - 100% on-time payments etc. Thanks for the info, I will study this a bit.