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I am preparing to get a mortgage and trying to improve my FICO score quickly. It's not a bad score, just trying to get it higher. My question is, does it matter where I put my payments?
I have $800 or so a month to put against these balances:
total debt: $7900; total available credit: $19,000
Is it the balance to limit ratio on each card that hurts you, or overall debt vs overall available credit? It matters because I could try knock down one card or pay a little on each.
They all matter including how much debt you have available to use, but Balance to limit ratio is the most powerful to increase score. For the next month slam that entire $800 on the first card you have listed in your post. Then Pay to as close to zero that you can on each and focus to using just one card consistently. Check and see if the CC company can move the $11k avail. balance card down as well. Make them drop you to 5k or something. Should be able to raise it later. Do NOT close any of them. Leave the others open and use them sparingly for small stuff like gas or quick groceries, then pay them off back to zero every month. you'll be shocked how fast and how far your score climbs.
Why would you drop the available 11k limit to 5k? That doesn't make sense, that would make the ratio above 50% on that card if it isn't paid off and lower the credit score.
If they were my cards/debt, I would knock down 1 & 2 as fast as I could (or whichever has the higher interest rate), in that order. Your ratio on #3 is well within acceptable limits, and I wouldn't touch the credit limit on any of them at all. You only have to use each card twice a year and pay them off to keep them active. If you have annual fees, I would consider closing those after you purchase your house. Or open a card with a credit union that has no annual fees for the same ratio as the card you want to close, then close the fee card after the new account is open.
Why would you drop the available 11k limit to 5k? That doesn't make sense, that would make the ratio above 50% on that card if it isn't paid off and lower the credit score.
If they were my cards/debt, I would knock down 1 & 2 as fast as I could (or whichever has the higher interest rate), in that order. Your ratio on #3 is well within acceptable limits, and I wouldn't touch the credit limit on any of them at all. You only have to use each card twice a year and pay them off to keep them active. If you have annual fees, I would consider closing those after you purchase your house. Or open a card with a credit union that has no annual fees for the same ratio as the card you want to close, then close the fee card after the new account is open.
But I'm not an expert, so what do I know?
I agree, lowering the limit on the $11,000 cc will hurt your FICO score.
As others have said, you shouldn't lower the limit on any of your cards, that will have a negative impact on your score.
You should aim for about 20% max utilization and that is for each card individually if your goal is to max the FICO score. I would first focus on getting each card below 40% and then below 30% and then down to 20% in order of the cards with the highest interest rate being addressed first.
If you just wanted to pay them off, then order the cards based on interest rate highest to lowest and pay as much as you can on the high interest rate cards and minimums on the rest. Then "snowball" those payments down as you pay off each card.
The ratio is fine on the 11k but the fact that he has the ability to charge up to 11k of additional debt pretty much cancels out the benefit of having a low ratio.Read my post again guys. The next thing I said was pay the other two down as close to zero as possible, NOT leave the balance at 5k, duh...when its all said and done, you want to show that your potential debt is low also. I've seen people have differences in score coincide with varying available balance limits..
11k or 100k doesn't matter, if credit bureaus see that at any moment there is the possibility that you can accrue a balance and payment that could adversely affect your ability to meet your other payments they will hold your score down to compensate for that...
Sorry Swil that ain't how it works for FICO -- while it is true that getting additional revolving credit DOES depend on the total of your available credit TO INCOME the FICO scores themselves DO NOT have a direct number of your actual income, the best they can do is 'impute' your income based on standards of the lenders that you have dealt with and the historic income to debt limits that such issuers have stuck with and even this varies quite a bit. If you get a store card from someplace that sells denim they have not much incentive to give anyone a high credit limit, very different from a store card for a electronics chain or even an affinity card from a major high end department store.
The OP should attempt to pay down the cards giving special emphasis to increasing the unused credit limit on each. Assuming these are all standard revolving credit cards the order that each should be paid down for maximum improvement on FICO is as listed. Knock out the $2600 limit card asap while also making payment LARGER THAN THE MINIMUM on both the others, then knock out the $550 limit card. Finally work down the amount on the $11k limit card. Gotta stay current on all of 'em , gotta avoid any sorts of lates on all other bills too. FICO will go up. When it does you can than think about maybe reducing available credit, but as long as you have discipline I would not worry too much about unless there is some other card that you want to switch everything over to...
Always get your payments in on time. That's a no brainer.
But the key to the best score is to ensure the lowest balance possible at the end of the month. Paying your balance in full on the second of the month does not help your ratio at all. Make your payments hit on the 28th of the month to get the most bang for your buck.
Is this $800 a one time payment this month only, or will this 800 be a consisten amount to pay debts monthly?
That completely depends on you. If you can afford $800 a month until it's paid off, go for it.
My bank makes sure that interest and premium is always paid each month by giving me a monthly payment above the min. interest due. If yours does this then I would suggest paying that amount for #2 & 3 each month while paying off #1. If this isn't how your bank works try to set your payments up in that way on your own while making the payments to #1 as high as you can. Say $50 or so more than the minimum for #2 & 3, and then $700 for #1 until it is paid off. Then move on to #2. This way you sort of work all of them , but work one a lot more than the others. Also you aren't adding up interest on the others while you pay off one.
If you can't afford $800 a month extra toward your debt, then find out what you can pay maximum and start at them. If you do it this way, it's possible for you to have them all paid off within a year or so.
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