@MeCasa wrote:After being around the forum for a couple of weeks I've managed to pick up a couple of hints at raising the credit score. Let me see if I'm right. I currently have 9 credit cards, most of them stay paid because I don't use them. But I do have two 0% cards that are maxed out. I thought this was a smart way to behave, using the bank's money as cheap money whereas the expensive cards are clean. But know I unnderstand that if I spread my debt around all the cards and keep everything below 25%, that the credit bureau's like this. I'll be paying more in interest but they'll like me better.
Is that correct?
1. FICO utilization is based on your reported balances. The reported balance is usually, but not always, the statement balance.
2. Having individual maxed out scores is bad for your scores, in all scoring models.
3. It's optimal to have most cards reporting zero balances.
4. There's no necessity to pay interest, and no the banks will not like you better if you do.
@MeCasa wrote:I do not have the funds to fully pay all the cards. My only choices are to leave it like it is or spread the debt over the 9 cards (all below 25% utilization) instead of having $20,000 at 0% interest and the rest of the cards empty.
It's impossible to say what the net scoring impact would be. You would be gaining points by removing the high utilization penalties, but losing points by having less accounts with zero balance. Since it is clear that your present situation is the best position from a financial standpoint, I agree with @Thomas_Thumb that you might as well just stick with it, and pay the 2 over utilized 0% APR accounts down gradually, and avoid reporting any balances on the other 7 cards.