The path to AZEO

I am slowly but surely improving things but curious to know the opinion of the group on the the utilization part of the score. In particular, if reducing individual card utilization to below 10% is better than paying that card off completely, and then shifting focus on the next card with balance. I have 5 credit cards with balances and overall utilization >90% but two of the cards are low credit limit accounts that could be paid off completely right away. The other 3 will take time to get paid down.

I am mostly concerned with FICO 5 for a mortgage. Since overall utilization is going to be rather high for a while I am trying to find optimize between lower number of accounts with balances while minimizing the damage of zero balance on individual cards. Anyone have any data from a similar scenario?

huffboy wrote: ↑Sat Apr 23, 2022 4:24 pm I am slowly but surely improving things but curious to know the opinion of the group on the the utilization part of the score. In particular, if reducing individual card utilization to below 10% is better than paying that card off completely, and then shifting focus on the next card with balance. I have 5 credit cards with balances and overall utilization >90% but two of the cards are low credit limit accounts that could be paid off completely right away. The other 3 will take time to get paid down. I am mostly concerned with FICO 5 for a mortgage. Since overall utilization is going to be rather high for a while I am trying to find optimize between lower number of accounts with balances while minimizing the damage of zero balance on individual cards. Anyone have any data from a similar scenario?

Hello and welcome to the forum. There is absolutely no damage by obtaining more zero balance cards if you have 5 cards with balances. The only time you would possibly see a score drop here is if you only had 1 of 5 cards with a [non-zero] reported balance and you paid that card off, thus resulting in All Zero (AZ) reported balances across all cards. When you're at 90% utilization, dropping your debt can only help your scores regardless of the path you take to do it. When looking at EQ5, less cards with balances definitely helps. That said, if you have the option of throwing $500 toward a card with a $500 balance (thus paying it off) or throwing $500 toward a card with a $5000 balance, taking the first option and paying off a card makes the most sense. I would suggest paying off lowest balance cards like the 2 accounts you referenced first. After that work on taking all cards down across known threshold points. For example, look to get all below 50% utilization, then all below 30% utilization, etc.

huffboy wrote: ↑Sat Apr 23, 2022 4:24 pm I have 5 credit cards with balances and overall utilization >90% but two of the cards are low credit limit accounts that could be paid off completely right away. The other 3 will take time to get paid down.

100% of revolving accounts reporting a balance has always caused a large drop on my mortgage scores. EQ/TU 8 also respond negatively, just not as bad. I think you'll see a nice gain across the board going from 100% to whatever the percentage is after 1 card reports at zero. The next card reporting at zero may not do anything for your scores. That seems to vary wildly based on a few different factors like number and type of accounts, in addition to overall age. I have noticed that FICO 9s respond very nicely with almost any sort of decreasing 'number of accounts with balances', especially that FICO Auto 9 score that a lot of auto dealers pull when setting up a lease. I've seen swings in that score of +/- 27 points from 100% AWB to 50% AWB, or 4 to 2 in my case. Just never be at 100% reporting with a balance.

It’s important to note that AWB includes both open and closed accounts, both revolving and loan. So if you have any closed accounts, you can’t hit 100% AWB. I would like to evaluate some accounts with true 100% AWB score shifts. BWB, however, only includes bankcards and is likely responsible for those score shifts at 100% of bankcards.

But balances and utilization, depending on bureau & version, can be calculated separately for bankcard, retail, loan, revolving, Chargecard,, and total debt (which excludes amounts owed on derogatory accounts and collections).