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I've got a bunch of low limit CC's that always report at or sometimes even above the limit. Currently I'm at 87% utilization and am curious if one could expect a fair amount of points by getting all of them under 50% or if it would be better to pay a couple completely off and leave a couple above 50% until I can get them paid down as well?
That's something that you can probably only find out by experimentation.
What are the dings on your FICO reports? (screen 2, on the left) I'm sure from what you wrote that you're hit for high util, but do you also get a ding for "too many accounts with balances"?
Practically speaking, since these are low-limit cards, I think I'd try to kill off as many as possible and then work on bringing the others down. If you have the money to do this, I would think that you'd get more bang for your buck, especially in terms of momentum. It can really be motivating to see a bunch of cards suddenly start reporting $0.
But if you don't need the emotional jump-start, you could instead pay off the highest-APR card first, then the next highest, and so on.
I'm just not sure that you'd see a lot of results in terms of scoring by inching them all down, a bit at a time.
Are you specifically trying to hit a certain score by a certain time for a specific purpose (mortgage app, for instance), or is this more of a case of roll up your sleeves and tackle your debt?
I'm trying to maximize points to apply for a mortgage. I have older derogs but totally clean since May 09 so I think the high utilzation is really hurting. Luckily it isn't a huge amount but not so small that I can take care of it all immediately.
What's your timeline for apping?
--I'm probably going to cause us to start crossing posts, and I apologize if that happens, but I think that in your situation, I'd do this:
pay off as many CC's as you can, right off the bat. That means that you'll pay off the smallest absolute balances first. Each individual CC might have high or low util, but you're looking to spread your available cash over the maximum number of accounts.
This tactic will reduce your total util by the same amount as if you lowered all the cards equally, plus you'll get some benefit by having fewer cards with balances.
After that, your next move will depend on your available cash in the future and what's remaining. If there are only a few cards left with balances, your choice will be whether to target the highest APR first, OR the lowest remaining balance first, OR the highest individual util first, OR get them all under 50%. The lower the better, of course.
Your decision at that point will depend on what you have left on how many CC's, how many are super-high util, how fast it will take to knock off one at a time, and so forth.
And since you're going for a mortgage, remember than an equally important goal is to have a chunk of cash in savings. Owning a home means lying in bed at night, listening to a brand-new funny noise, and wondering how much it will cost to fix whatever has happened this time.
Good luck!
Here's my example of going from 89% to 3%. On EQ, I did a big crossover past 50% but you can get a general idea on TU:
I am trying to get a home loan and paid my credit card down to 9% last week. The lender checked to see how it will help my scores and though it's not set in stone it looks like my EX and TU scores will inscrease around 40 points and my EQ score 50 points
llecs- thanks so much for posting your thread here, I have read so much on here about this but had never seen such a detailed example- what a great read. Very inspirational!
@haulingthescoreup wrote:--I'm probably going to cause us to start crossing posts, and I apologize if that happens, but I think that in your situation, I'd do this:
pay off as many CC's as you can, right off the bat. That means that you'll pay off the smallest absolute balances first. Each individual CC might have high or low util, but you're looking to spread your available cash over the maximum number of accounts.
This tactic will reduce your total util by the same amount as if you lowered all the cards equally, plus you'll get some benefit by having fewer cards with balances.
After that, your next move will depend on your available cash in the future and what's remaining. If there are only a few cards left with balances, your choice will be whether to target the highest APR first, OR the lowest remaining balance first, OR the highest individual util first, OR get them all under 50%. The lower the better, of course.
Your decision at that point will depend on what you have left on how many CC's, how many are super-high util, how fast it will take to knock off one at a time, and so forth.
And since you're going for a mortgage, remember than an equally important goal is to have a chunk of cash in savings. Owning a home means lying in bed at night, listening to a brand-new funny noise, and wondering how much it will cost to fix whatever has happened this time.
Good luck!
If OP's goal is to get the highest score possible, it seems logical that the lowest possible individual trade line utilization is that he/she is looking for.
Assuming that's the case, it makes sense to make each dollar of payment -- beyond the minimum payments for each card -- to the lowest credit limit card. One of the benefits of this, is that it reduces the risk of one or more CCCs balance chasing his/her credit limits on one of the larger credit limit cards if he/she directed payments to one of those cards. If small limit cards balance chase him, it should have less impact on utilization compared to larger limit cards.
OP might not make any score gains if CCCs cut his limits.
Yeah llecs - that's a great post! How did you pay for all of those score pulls anyway? Well, I guess you paid them, but gee wiz! Good info.