question about cc util

[Anonymous]

question about cc utilization. My dh has 2 credit cards. One we just paid down to 26% util. and the other is at almost 90%. I have read here that some people have different opinions about keeping all at a certain % and others keeping a "balance". So what % should we try to get the one at 90% down to?

[MarineVietVet]

---

@Anonymous wrote:

question about cc utilization. My dh has 2 credit cards. One we just paid down to 26% util. and the other is at almost 90%. I have read here that some people have different opinions about keeping all at a certain % and others keeping a "balance". So what % should we try to get the one at 90% down to?

---

There are different opinions about how to use utilization to get the most bang for your buck. (Imagine that; differences of opinion.  )

I am of the group that recommends that no matter how many CC's you have try each month to have only one one them report a small (<9% of credit limit) balance on the statement and then pay in full before the due date to avoid interest. On any other cards always have them report a zero balance. That doesn't mean you can't use them during the month it just means to time any payments to ensure that these other cards have a zero balance on their statements.

Just my 2 cents.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

[Anonymous]

ok-we have a long way to go then..lol. We can get there. Thanks for clarifying.

[MarineVietVet]

---

@Anonymous wrote:

ok-we have a long way to go then..lol. We can get there. Thanks for clarifying.

---

What I mentioned is best case scenario and we all know that life has a way of upsetting our plans and it's often not possible to have everything work out perfectly.

FICO scores both overall utilization and individual card utilization. 26% is pretty high but not a terrible utilization by any means. I would use any extra money to try and lower that 90% utilization as fast as I could while still having the goal of eventually having one at <9% and the other at zero.

Just keep at it.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

[Anonymous]

ok-thats what we will work on. ahhhhhhh to be rich...lol. I can dream cant I...

[Anonymous]

I believe hitting 30% utilization on a card is the beginning of significant score impacts; so your card at 26% is below that marker - which is a nice plus.  (Of course, below 9% is the golden spot).  As you pull the 90% card down, you'll see nice things happening score wise.  When they're both below 30%, it might be a good time to get one down to 0.  Or whatever else works best for you.  But the 90% card is the killer right now - not so much the 26% card.

[Anonymous]

Thanks for your thoughts beamMEup-I think that 90% util cc is making the FICO cry "HELP!"...haha..lol. I really like how you explained getting both to 30% and then getting one to 0. Thats a good goal for us. I will talk to the DH about getting strict with making bigger monthly payments.

[RobertEG]

Dont forget.

It is NOT all about FICO score.

Utils of 80%-90% can send concerns through the bones of the creditor.

Credit limit reductions?   Account closure?

[MarineVietVet]

---

@RobertEG wrote:

Dont forget.

It is NOT all about FICO score.

Utils of 80%-90% can send concerns through the bones of the creditor.

Credit limit reductions?   Account closure?

---

You're right Robert. These numbers can make a lender nervous. They begin to wonder why the high percentages and if the consumer is on the verge of being in real financial trouble.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

[vanillabean]

Before a util can impact your score, it must be calculated. A myFICO score report lists the overall util, but does not list the util of each card, and it does not show how it arrived at the overall util.

The overall util in its most plain form is adding up the monthly balances and the credit limits of all open cards in your credit report and taking the average ratio. But not all cards are not created equal.

You may have a card, whose available credit is down to 10%, but if neither the credit limit nor the high balance is reported, the card is not used for FICO util. There are other exceptions.

A good thing about all zero balances is that you can't possibly get a late because there's nothing to pay late on. So your 35% payment story of what makes up your score is perfect. Your 30% debt is also perfect.

And because there's no balance to carry over to the next billing cycle, there's no risk of having to pay interest on anything. No balances also present the cards as a sort of emergency fund.

That's the bigger picture. That a 1% overall util yields a higher score than at 0% is small potatoes. Your score at 0% is already so good that squeezing out another few points may have no practical effect.

While I agree that less than 50%, 30% and 10% are milestones, there's no point in losing such util weight if it jeopardizes your general financial health. It's best in parallel to strive for both to be in order. Once they are, much unexpected will often hardly raise any eyebrows.

Let's say a new card reports its high balance, but not its credit limit. I like to report a balance the first month to see a normal statement and test out the autopay. This comes at the price of the card appearing to be maxed out, because the high balance is updated to the monthly balance.

Still, my EQ recently experienced a drop of a mere 15 points due to it. I see that as an indication that separately from the 100% util for that card, it also matters what the monthly balance is in itself. There is a difference between $10 and $10,000. Mine was in the $10 end.

I sense that OP is optimistic about bringing down her household credit card debt in a fairly short time. That's good whenever possible. There is no advantage to having a credit card balance total of more than a small amount other than to make it through a rainy day.