@gbfan10 wrote:
Does the utilization matter on a per card basis, or overall? Would it make sense to pay off a card with a 300 limit before a $2k limit?
Both are factors. To see that in play, imagine two guys, Bob and Fred, both of whom have five cards, each with a 2k credit limit (and let's suppose their credit profiles are otherwise identical too -- age, inquiries, etc.). Bob reports with $400 on each card. Fred reports with $1920 on one card and $20 on each of the other four cards. Both guys have a total debt of $2000 or 20% total utilization. But Fred has one card that is almost completely maxed out (96%). Fred's score will be significantly lower than Bob's, because he is taking a hit from having a very high utilization on one card.
The "per card" utilization begins to have a comparitively low impact once each card is < 70%. (Nobody knows the exact breakpoint, and it may vary according to the scorecard you are in. Maybe the breakpoint is 90%, The point is, as long as none of your cards are close to being maxed out, then this factor doesn't matter as much.)
You ask what strategy would make most sense. If the sole concern was maximizing your FICO score, then it would make most sense to pay each card down to below some percent. e.g. 70%. Then you'd focus on creating as many cards with a zero balance as possible (as jlynn0819 pointed out). That's because a third factor is the number of accounts showing a balance (the more $0 cards the better, as long as you have one with a positive balance).
That's a strategy that assumes that creating the best FICO score is your only concern. But there are other concerns, and therefore other strategies competing for "best" -- depending on what is important to you. For example, once you get all your cards away from being almost maxed out, maybe it makes sense to pay off the highest interest cards first, and not worry about how many $0 balance cards you have. That strategy may save you more money.
Let me know if that makes sense.
