clean file and utilization

[Anonymous]

Hell yeah!  I am real fond of BBS.  No doubt.

So to answer your question, I am first gonna recap your situation:

You have 7 credit cards total.  5 are reporting $0.  Your Citi and and Amex are reporting fairly big balances, with the Amex the biggest at an individual util of 54%.  You are concerned that your mortgage scores have gone down and would like to know the best strategy for improving your mortgage scores.

Sound right?

Then I think the strategy is simple.  Pay down both card to under 26%.  (28.99% is probably the key, but remember that you will get charged interest, so better to make it lower, so that your cards stay at under 28.99%.)

Then, in addition, pay each card down as much extra as you can comfortably.  If you can get your total (aggregate) util to under 8.99% that will probably eliminate all utilization penalties.

And the mortgage scoring models will love it that you have 5 out of 7 cards showing a $0 balance.  Thomas Thumb has done a good deal of testing and believes that the mortgage models are much more sensitive to having most of your cards showing a $0 balance.

BBS, what do you think?

[Anonymous]

I think that sounds like a reasonable plan.  I may have missed it, but has the OP expressed the dollar amount balance on the Amex and Citi cards?  Thus far I only recall any data being expressed in percentages.  While percentages are more important in terms of FICO scoring, they definitely are less important when discussing a strategy to pay off/down a card or cards as people pay in dollars and not in percentages.  What I mean is that paying down 15% (for example) on the Amex card verses the Citi card could be considerably different dollar amounts.  Or they could be similar.  No way to know without asking.  And, of course, it's important to know if the strategy here is score maximization or interest minimization, as that answer would certainly impact any advice given.  Generally, it seems that most on this forum are trying to achieve both.

[Sbrooks1]

Both cards are 0 interest for the next 12-18 months , my main interest is in maximizing mortgage scores as much as I can given that I had a huge expense trying to save my sweet dog Lola. I currently have a preapproval , but am going to put off an offer I guess until I can pay these down

[Sbrooks1]

Amex is 5400/10000 and citi is 800/3500

[Anonymous]

Great point by BBS regarding the dollar amounts.  See how smart this guy is?

Now tell us how much money you are gonna have in the next 6 weeks for paying down the two cards.

My guess is that the smart thing to do is (purely from a scoring perspective) these things in the following order:

       (1) While making $100 monthly payments on the Citi, pay the Amex down to about 25%.

       (2) While making $100 monthly payments on the Amex, pay the Citi down to $0.

       (3) Pay the Amex down until you are at maybe 8% total util.  Pay it down much more if you want to save yourself interest.

Are you planning to buy a house soon?

[Anonymous]

As CGID asked, what is your budget in terms of paying down these two balances over the course of the next several months?

If I had $1000, I would throw exactly $500 at each of these cards because doing so would bring the Citi card to just under 9% utilization while also bringing the Amex card to 49% utilization.  That move could result in a score increase due to threshold crossing.

After that, I agree with paying off the Citi card completely so that you have 6 cards with zero balances and then just chipping away at the Amex until you get it into low single-digit utilization.

Since you have zero interest on both cards for the next year, you are in a good place and don't have to worry about the balances relative to interest which is nice!

[Sbrooks1]

I don't have several months!! Already have a preapproval and yes weeks away from making an offer . Eq 08 had a 10 point drop ! So, looks like the clean file took the hardest hit

[Anonymous]

Then my thought is to spend most of your paydown on the Amex but still some on the Citi.  Goal should be (in my approach) to reduce both to roughly the same % util.  Maybe 23%, 24% whatever.  You'll have both well under 29% that way and will have lowered your total U a lot too.  And your will also have 5 out of 7 cards showing a $0 balance -- which the mortgage models will like.

Best of luck.

[Sbrooks1]

Thanks guys for the input, in not sure how my mortgage scores were effected , but I think I can pay the citi to zero before statement cuts and the Amex to 39, I'm thinking this will be the best for mortgage scores and that's all I care about at this point . Will try and get aggregate < 10 and hopefully <8.99

[Anonymous]

I am guessing that's a fine plan.  It's hard to know whether 6 out of 7 at $0 (but with an individual util > 31%) is better or worse than 5 out of 7 showing $0 (but with both cards at < 28%).  It may be a push.

Best wishes...