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Should I leave small balance on cards to improve overall Utilization Ratio

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Anonymous
Not applicable

Should I leave small balance on cards to improve overall Utilization Ratio

Carrying balances on 9 accounts at 56% Util.

Should I carry a small balance on 4 other cards and my overall utilization 42%.

 

I am trying to get maximum impact to my score.

Around 660 now, want to get close to 700.

 

8 REPLIES 8
chiefone4u
Established Contributor

Re: Should I leave small balance on cards to improve overall Utilization Ratio

Going from 56% down to 42% utilization will give you about 5 point increase. 

 

To hit the 700 and higher you'd like you'll need to get your aggregate utilization under 8.9% and have no cards reporting more than 28.9% individual utilization. 

 

AZEO is another method to get the most out of your scores. All except one account reports $0 and that one account (major not store card) you let report a small balance $5 (or about 1% utilization).

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Message 2 of 9
flexin222
Regular Contributor

Re: Should I leave small balance on cards to improve overall Utilization Ratio

Great thread Zen25, and I don't mean to hijack. I was under the idea that having under 10% utilization or even better under 8% would constantly increase your fico numbers. Am I wrong keeping very low balances like $300 or less on at least 3 cards? Since the pandemic I've been zeroing out my credit and making sure I have no debt in case of illness. I did a Fico simulator that showed higher fico scores with even lower limits. I don't understand to a point of having credit and not using hardly any of it! These companies make money off consumers spending and using credit, but hold it against consumers for using that credit. If the consumer shows good spending and payment practices why are they not rewarded with wayyy more points? I understand that your credit history is a factor also...









Message 3 of 9
SouthJamaica
Mega Contributor

Re: Should I leave small balance on cards to improve overall Utilization Ratio


@Anonymous wrote:

Carrying balances on 9 accounts at 56% Util.

Should I carry a small balance on 4 other cards and my overall utilization 42%.

 

I am trying to get maximum impact to my score.

Around 660 now, want to get close to 700.

 


No you should shoot for:

1. No single card reporting more than 28%

2. Aggregate cards reporting 8.9% or less

3. As many cards as possible reporting zero


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 4 of 9
SouthJamaica
Mega Contributor

Re: Should I leave small balance on cards to improve overall Utilization Ratio


@flexin222 wrote:

Great thread Zen25, and I don't mean to hijack. I was under the idea that having under 10% utilization or even better under 8% would constantly increase your fico numbers. Am I wrong keeping very low balances like $300 or less on at least 3 cards? Since the pandemic I've been zeroing out my credit and making sure I have no debt in case of illness. I did a Fico simulator that showed higher fico scores with even lower limits. I don't understand to a point of having credit and not using hardly any of it! These companies make money off consumers spending and using credit, but hold it against consumers for using that credit. If the consumer shows good spending and payment practices why are they not rewarded with wayyy more points? I understand that your credit history is a factor also...


I don't really understand your post but if you're in a position to pay off all your cards here's how you should maintain your accounts to maximize your scores across all scoring models:

1. Have all but one of the cards report zero balance

2. Have one bank card (not a credit union or store card, and not a Chase card) report a small balance before you pay it off

 

I disagree that the lenders don't want you to spend; they do want you to spend, just not too much in proportion to your credit limits. And I disagree that FICO scores don't reward good payment and spending practices. It's about 65% of your scores that you pay promptly, and use some but not much of your credit limits.

 

In the unsolicited advice department:

don't bother with the simulators, they are usually completely wrong

 


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 5 of 9
Anonymous
Not applicable

Re: Should I leave small balance on cards to improve overall Utilization Ratio

TBH, I'm not sure where it get lost in translation. But a person does not have to carry balances to show CC use, as SJ explains. You simply need to let "a" balance report then PIF. Specifically only on one card. All others should always report zero, but that doesn't mean you cannot use them, you simply PIF before the statement cuts.

 


@Anonymous wrote:

Carrying balances on 9 accounts at 56% Util.

Should I carry a small balance on 4 other cards and my overall utilization 42%.

 

I am trying to get maximum impact to my score.

Around 660 now, want to get close to 700.

 


I'm not sure doing this will help in any way, balance shuffling might improve your score a few points. But it doesn't negate what lenders see, that your balances are not decreasing. At least not quickly enough. Plus you're going to ge thet "too many accounts with a balance" penalty.

As other haev pointed out, you'll ge the best outcome having UT at or below 28% on individual cards. But like i said above spreading them out to get that outcome may not help in the end. You could haev a very good score, but the lender may feel you currently have enough debt.

 

 

Message 6 of 9
Anonymous
Not applicable

Re: Should I leave small balance on cards to improve overall Utilization Ratio

Moving some balance to 4-5 other unused cards would reduce the individual utilization.

I see in Credit Karma and some other places, utilization is being calculated from the cards being used, somehow it is not taking all of my credit lines. By putting small balances I am increasing the denominator and reducing the active utilization.

 

Not sure FICO scores ding us for using more cards.

That is what I wanted to know.

Message 7 of 9
Anonymous
Not applicable

Re: Should I leave small balance on cards to improve overall Utilization Ratio

Individual UT is based on those cards "used", but overal UT is based on total open CL's. 

 

Moving small balances to other cards will likely not pay off in the way you expect, but you're welcome to try for your own DP's.

To reiterate, adding more cards to the mix doesn't change it in the way I think you think it will.

Message 8 of 9
805orbust
Valued Contributor

Re: Should I leave small balance on cards to improve overall Utilization Ratio

And while you're at it, pay no mind to Credit Karma scores. Use it to only to access credit balance data.



Message 9 of 9
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