The Utilization Factor

[SouthJamaica]

---

@credit_endurance wrote:

---

@Anonymous wrote:

---

@credit_endurance wrote:

I will admit it will be tough to maintain this strategy.

---

If you can tell us the total number credit cards you have, the folks here can help you find a solution that will fit your style and be easy to maintain.

---

I currently have 20 cards reporting I know alot! I'm in the process of fine tuning some things and will probably close 3 or 4 of them shortly. And will be requesting to shift credit lines over to other cards to increase their limits.

---

My advice would be to not close any accounts, just sock drawer them for now. If they're closed they're not going to help lower your utilization percentages.

[credit_endurance]

---

@SouthJamaica wrote:

---

@credit_endurance wrote:

---

@Anonymous wrote:

---

@credit_endurance wrote:

I will admit it will be tough to maintain this strategy.

---

If you can tell us the total number credit cards you have, the folks here can help you find a solution that will fit your style and be easy to maintain.

---

I currently have 20 cards reporting I know alot! I'm in the process of fine tuning some things and will probably close 3 or 4 of them shortly. And will be requesting to shift credit lines over to other cards to increase their limits.

---

My advice would be to not close any accounts, just sock drawer them for now. If they're closed they're not going to help lower your utilization percentages.

---

I have some SP CLI opportunities coming up soon so I think I will wait and see what happens with that then if  I get larger increases on those cards I will then close a few of my least desirable ones.

[Anonymous]

There are basically two areas here, as there are for basically anybody who has a lot of credit accounts:

(1) How to improve your FICO score

(2) How to improve your finances

You'll sometimes hear that as what makes scoring sense and what makes financial sense.

Your post initially brought up #1 as the primary issue.  So I'll summarize what's best here.  One of the things FICO likes to see is when most of your open credit cards have a $0 balance.  That's the thing you were trying to figure out.  My guess is that you won't get any more scoring points here since most of your cards are indeed at $0.  But given that you have a couple cards with comparatively tiny balances, why not pay them to $0?  I am thinking for sure about the Amazon card and if you like the Navy Fed Platinum.

After that, the only scoring task is paying down all cards to under 29% -- and then finally paying all of your debt off entirely.  Once you do that you can continue to use a few cards for expenses and always pay them in full.  You'll need to take all your cards out of the shoebox every six months and use them for something.  Some people choose to recharge their Amazon account with 50 cents.  Some people bring them all to the grocery store and buy a different item with each one.  Whatever.

(2)  How to improve your finances

This is really the issue.  It's really a lot more important than #1.  My takeaway from reading your posts is that you are trying to execute all kinds of complicated maneuvers: CLIs, balance transfers, credit limit transfers, etc.  None of these will help you with the central problem, which is that you are carrying about 8k of debt.  (None of them will really help your score either.)  So you just need to buckle down and pay it off.  That will mean creating a budget where you spend far less than you take in.

I hope all this makes sense and wish you the best.

[SouthJamaica]

---

@credit_endurance wrote:

---

@SouthJamaica wrote:

---

@credit_endurance wrote:

---

@Anonymous wrote:

---

@credit_endurance wrote:

I will admit it will be tough to maintain this strategy.

---

If you can tell us the total number credit cards you have, the folks here can help you find a solution that will fit your style and be easy to maintain.

---

I currently have 20 cards reporting I know alot! I'm in the process of fine tuning some things and will probably close 3 or 4 of them shortly. And will be requesting to shift credit lines over to other cards to increase their limits.

---

My advice would be to not close any accounts, just sock drawer them for now. If they're closed they're not going to help lower your utilization percentages.

---

I have some SP CLI opportunities coming up soon so I think I will wait and see what happens with that then if  I get larger increases on those cards I will then close a few of my least desirable ones.

---

Remember it's not just about dollar percentage, it's also about the percentage of cards reporting a balance.

[credit_endurance]

---

@SouthJamaica wrote:

---

@credit_endurance wrote:

---

@SouthJamaica wrote:

---

@credit_endurance wrote:

---

@Anonymous wrote:

---

@credit_endurance wrote:

I will admit it will be tough to maintain this strategy.

---

If you can tell us the total number credit cards you have, the folks here can help you find a solution that will fit your style and be easy to maintain.

---

I currently have 20 cards reporting I know alot! I'm in the process of fine tuning some things and will probably close 3 or 4 of them shortly. And will be requesting to shift credit lines over to other cards to increase their limits.

---

My advice would be to not close any accounts, just sock drawer them for now. If they're closed they're not going to help lower your utilization percentages.

---

I have some SP CLI opportunities coming up soon so I think I will wait and see what happens with that then if  I get larger increases on those cards I will then close a few of my least desirable ones.

---

Remember it's not just about dollar percentage, it's also about the percentage of cards reporting a balance.

---

Yes. I am realizing this and will work on PIF of the smaller balances reporting which is like 3 cards I do believe.

[credit_endurance]

---

@Anonymous wrote:

There are basically two areas here, as there are for basically anybody who has a lot of credit accounts:

(1) How to improve your FICO score

(2) How to improve your finances

You'll sometimes hear that as what makes scoring sense and what makes financial sense.

Your post initially brought up #1 as the primary issue.  So I'll summarize what's best here.  One of the things FICO likes to see is when most of your open credit cards have a $0 balance.  That's the thing you were trying to figure out.  My guess is that you won't get any more scoring points here since most of your cards are indeed at $0.  But given that you have a couple cards with comparatively tiny balances, why not pay them to $0?  I am thinking for sure about the Amazon card and if you like the Navy Fed Platinum.

After that, the only scoring task is paying down all cards to under 29% -- and then finally paying all of your debt off entirely.  Once you do that you can continue to use a few cards for expenses and always pay them in full.  You'll need to take all your cards out of the shoebox every six months and use them for something.  Some people choose to recharge their Amazon account with 50 cents.  Some people bring them all to the grocery store and buy a different item with each one.  Whatever.

(2)  How to improve your finances

This is really the issue.  It's really a lot more important than #1.  My takeaway from reading your posts is that you are trying to execute all kinds of complicated maneuvers: CLIs, balance transfers, credit limit transfers, etc.  None of these will help you with the central problem, which is that you are carrying about 8k of debt.  (None of them will really help your score either.)  So you just need to buckle down and pay it off.  That will mean creating a budget where you spend far less than you take in.

I hope all this makes sense and wish you the best.

---

I am looking over my cards and I forgot a couple smaller balances reporting like Blispay $636 since christmas holiday shopping spree. Which has only reportd so far on EX but has impacted my scores there. Amazon is the other. Aviancia  $147.00 membership fee plus small expense to recieve the bonus miles. Paying these off right away should help.

I think a couple more things I forot to mention that seems to play a factor in scoring is AAOA. I just started rebuilding this time last year apping for many cards out of experimenting and others out of just shear wanting them. Some have been fruitful while a few I do regret apping for but, I guess that's just the rice of rebuilding. I do know I need to let these cards age to see some gains in scores. So patience will be a virtue. And I agree my scores have probaly reached a platuea due to this as well.

I guess my thnking was the more credit you can obtain to cushion utlization the better. I often see other with credit profiles closer to the 800 range with avaiable credit in the half million dollar range and think to myself hey" Its something their doing right". I myself am closer to a quater million in available credit  with only 5-7% of it reporting as balances and thinking this is certainly a good thing in the eyes of fico scoring but I am seeing every profile is different.

Grat observation CreditGuyinDixie and SouthJamacia. I will try to apply these principles moving forward sfor sure.

[Anonymous]

---

@credit_endurance wrote:

---

I guess my thnking was the more credit you can obtain to cushion utlization the better. I often see other with credit profiles closer to the 800 range with avaiable credit in the half million dollar range and think to myself hey" Its something their doing right". I myself am closer to a quater million in available credit  with only 5-7% of it reporting as balances and thinking this is certainly a good thing in the eyes of fico scoring but I am seeing every profile is different.

---

That's a common belief but it is completely untrue.  Having a low utilization is very important for a high score, but you can have only one credit card with a $500 credit limit, spend thousands of dollars each month on that card, and still have a utilization of 1-3% -- simply by paying your card down.  A large credit limit, in itself, does not give you even 1 extra FICO point.

Note that, in pursuit of this phantom benefit, you have raised your total CL to nearly a quarter of a million dollars, and your scores are in the upper 600s.  (I.e. your scores are low.) That is something to reflect on.

There's nothing you can do to change the fact that you opened all these cards, but it's important moving forward to avoid contiuing to have a mistaken belief about what will help your score.  The way to have a low utilization is to pay off your debt.  All people can do this.  You do not need "cushion" -- you need the will to avoid spending money you do not have in the bank.

I do like your idea of combining cards and closing crap cards that you realize in retrospect you don't need.  Even if that lowered the total number of open revolving tradelines to 13, that would still be a ginormous number of them.  You could have three cards showing a positive balance and that would still be < 25% of your cards -- it's immensely unlikely FICO gives anyone extra scoring points for having more $0 balances than that.

By the way, some scoring models (e.g. the ones used by insurance industry) punish you for having store cards and for having cards with extremely small credit limits.  You may want to bear that in mind as you make plans over the next few years.

[credit_endurance]

Well, that puts it all in prospective for me CreditGuyinDixie. My pursuit of "more" credit ends here. Makes much more since to just properly manage what you have and let the rest fall into place. And besides I will never come close to using all the available credit I have obtained. While it's been a nice feeling obtaining these cards with higher limits now the rush only last until your next app and I am done until  getting a mortgage approval or maybe a car loan in the near future. Speaking of which where does your scores need to "idealistically" be to get mortgage approvals these days?

[Anonymous]

To get approved for a mortgage is possible with the scores you have now.  But to get approved for the best interest rates you need an 740 I believe, and to get the best deal on PMI you need scores higher still.

Bear in mind that your mortgage scores are different from your FICO 8 scores.  They might well be lower than the scores you have now.  If I were you I would spend the next 15 months applying for absolutely no new accounts (unless it is a car) and paying off all your CC debt.  (Hopefull you can get your CC debt paid off even sooner.)  After you play off all your CC debt use one card and always pay in full.

When all of your inquiries have aged > 12 months and your youngest account is > 12 months old, you will be in great shape to purchase your mortgage scores here on myFICO.

[credit_endurance]

---

@Anonymous wrote:

To get approved for a mortgage is possible with the scores you have now.  But to get approved for the best interest rates you need an 740 I believe, and to get the best deal on PMI you need scores higher still.

Bear in mind that your mortgage scores are different from your FICO 8 scores.  They might well be lower than the scores you have now.  If I were you I would spend the next 15 months applying for absolutely no new accounts (unless it is a car) and paying off all your CC debt.  (Hopefull you can get your CC debt paid off even sooner.)  After you play off all your CC debt use one card and always pay in full.

When all of your inquiries have aged > 12 months and your youngest account is > 12 months old, you will be in great shape to purchase your mortgage scores here on myFICO.

---

I was wondering about my recent inquiries and accounts and if they would affect my ability to purchase a home. That's why I see many posted titled " Post house closing app spree" 😀 Can't thank you enough CreditGuyInDixie for your insight and others who contributed to this topic. I will gather all the principles presented and report back on my progress. PS. Feel free to share anything else that you think I have missed touching on.