Overall vs individual UT

[QCS123]

I currently have 9 cards, 6 of which currently have balances (I wasn't paying attention on vacation).  We just did a BT to a 0% card, but now I'm thinking that might not have been a good thing?  It's due to report any day now and this is what the balances are at currently 56%, 10.5%, 10.3%, 7%, 2.65%, 2.3% with the overall utility at 16% (rounded up). I'm dredding the FICO pt loss due to happen.

In the next several weeks we will be able to pay all off but two so the next reporting will look like 45% and 7% with overall UT at 10% or less if we can swing it I'll try to get it at 8.9%.

We plan to have the BT paid off by Aug of this year. At that point we will have just small statements showing balances 1-5%, but paying in full each month.

So the question is should I have split the BT between two accounts (still 6 of 9 accounts showing balance) or put it on one account like I did because it's just a temporary dip for one month or so and our FICO should recover quickly?  

[HeavenOhio]

It's hard to say for sure. 48.9% is a known threshold, but it doesn't necessarily apply to each and every profile. Splitting the BT would have been a safer bet scoring-wise, but it may or may not have mattered.

I think the more important factor is interest. Had the second BT gone onto a card that wasn't at 0%, the cost in dollars would have been more significant than the points that'll return later this summer.

The other thing to keep in mind is that you've done nothing so far that should spook your lenders. Additionally, your plan to pay down balances farily soon is going keep them comfortable.

[DollyLama]

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@QCS123 wrote:

I currently have 9 cards, 6 of which currently have balances (I wasn't paying attention on vacation).  We just did a BT to a 0% card, but now I'm thinking that might not have been a good thing?  It's due to report any day now and this is what the balances are at currently 56%, 10.5%, 10.3%, 7%, 2.65%, 2.3% with the overall utility at 16% (rounded up). I'm dredding the FICO pt loss due to happen.

In the next several weeks we will be able to pay all off but two so the next reporting will look like 45% and 7% with overall UT at 10% or less if we can swing it I'll try to get it at 8.9%.

We plan to have the BT paid off by Aug of this year. At that point we will have just small statements showing balances 1-5%, but paying in full each month.

So the question is should I have split the BT between two accounts (still 6 of 9 accounts showing balance) or put it on one account like I did because it's just a temporary dip for one month or so and our FICO should recover quickly?  

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So if I'm reading this right, 9 open cards, 6 have balances, only 3 will be balance transferred. The remaining 3, 2 will be paid off by next statement date, leaving the BT card at 45% of its's line of credit and 1 revolver at 7% of its' line of credit? With overall dropping to 10% utilization across all accounts. 

I think you will not be worse off when all cards are reported paid from the BT and other 2 cards. You already have one at >50% utilization, do the highest now will be 45% on one card, getting there, but not crossing the >48.9 threshold. Especially since this will be paid in full in just a few months, it is very temporary. Overall is not crossing any higher threshold either. Cards carrying balances will also drop from 6/9 to 2/9. 

You will not be closing any of these accounts correct? 

[SouthJamaica]

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@QCS123 wrote:

I currently have 9 cards, 6 of which currently have balances (I wasn't paying attention on vacation).  We just did a BT to a 0% card, but now I'm thinking that might not have been a good thing?  It's due to report any day now and this is what the balances are at currently 56%, 10.5%, 10.3%, 7%, 2.65%, 2.3% with the overall utility at 16% (rounded up). I'm dredding the FICO pt loss due to happen.

In the next several weeks we will be able to pay all off but two so the next reporting will look like 45% and 7% with overall UT at 10% or less if we can swing it I'll try to get it at 8.9%.

We plan to have the BT paid off by Aug of this year. At that point we will have just small statements showing balances 1-5%, but paying in full each month.

So the question is should I have split the BT between two accounts (still 6 of 9 accounts showing balance) or put it on one account like I did because it's just a temporary dip for one month or so and our FICO should recover quickly?  

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In my experience the big drop in FICO 8 scoring comes at 30%. If an individual card goes over 30% I get a significant ding. So when I do a balance transfer which I intend to let report, I try to keep it at 28% of the limit on the card to which I'm making the transfer. But of course the ding is a temporary one.

So it depends on what your priority is at the moment. If you prioritize saving money with the 0% rate, then go for it. But if you don't want the scoring penalty keep it below 30%.

Also bear in mind that although the scoring effect on FICO 8 is well known, and IMHO FICO 9 and Bankcard 8 behave very similarly, it is much less clear what the effect is on mortgage scores. It appears that mortgage scores are more sensitive than these models to the number of cards reporting.

[QCS123]

You all made very good points - thank you

HeavenOhio - I didn’t think about spooking the lenders, s o that was good to hear that.  Also good to hear our plan to pay down quickly is also a good plan.  Thanks

Dolly Lama - the card with the 56% UT is the balance transferred card. We will not be closing any cards/accounts. Thanks for the info. about thresholds too.

SouthJamaica - We want to save money and not have too bid of a scoring penalty or at least one that is fully correctable when the BT account is either paid down below 29% or paid off completely.  I appreciated your comments on how it can effect different scores, we had not considered how it might effect mortgage scores, which is why we are doing all of this.  We are trying to get out scores up and in fairly good shape to hopefully get a house sometime within the next two years (sooner rather than later).

[QCS123]

The score drop hit today for two of the CB.  One took a 4pt drop and the other a 2pt drop.  The alerts from my fico all reflect the increased percentage for the BT card, so I am hoping the points lost today are reflective of that and that there will not be more fall out in the days to come.  Crossing my fingers that this is it, because it's not as bad as I was expecting. Still waiting for the third CB to hit, once it does I have a report ready to be pulled at the end of the month so I should see the true fallout then.  It will be interesting to see how it effects the other scores like the mortage score etc.  We aren't planning anything other than a mortage in the next year or so, so that is the one I'm most interested in seeing the effects of.

[Anonymous]

The most important things are:

(1)  You will not be applying for credit for at least a year

(2)  You will have all of your CC debt paid off in less than four months.

When you combine those things, it doesn't matter what you do with your CC balances, as long as you keep each card under 89% and your total utilization under 49%.  Even if you lost 50 points (you won't given the minor issues you descibe) you'd gain it all back when the CC debt was paid off.

If a person had very borderline scores to begin with (e.g. 670) then he additionally has to be carefully not to have big score drops to avoid spooking his creditors.  But you have scores around 720.

So forget about it.

[Anonymous]

I agree with CGIDs words above.  In your original post, you stated that you're worried about your credit scores dropping.  At first you didn't say why, but later said that you may apply for a mortgage in 2 years or less.  Since utilization only matters at any one specific point in time, it only is going to matter just before you apply for that mortgage.  Minor swings of +/- 10-15 points over the course of the next year due to reported utilization changes really doesn't matter.  You said you could have everything paid off in less than half a year, so you really have nothing to worry about here.

[QCS123]

Information shared is great and I understand we have time on our side and my scores are okay, I just want to keep them above 700.  From what I gather from all comments and helping me understand that shouldn't be a problem in the long run. Now we just have to work on getting my DH's score up, he's in the 650 range.  We need to get him up above 700 too before we get a house.  We are just worried if we wait too long, the interest rates will have gone up too high and we'll be priced out of the market...sigh, wish we could take the plunge now, but I'm not sure with his scores (and two baddies) we could get a loan.

Anyway, thanks for everyone's comments and help!

[Anonymous]

You could get one, but it wouldn't be at the most favorable interest rate.  Holding off 6-12 months longer for something that will take you from a so-so interest rate to a great one is nothing in terms of time when you compare that to a 30-year mortgage.  Even a small change in interest rate can equate to tens of thousands of dollars over the life of the loan.