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Credit Card Gurus- A Quick Question

Discussion in 'Off Topic [BG]' started by Bryan R. Tyler, Sep 25, 2005.

  1. Bryan R. Tyler

    Bryan R. Tyler TalkBass: Usurping My Practice Time Since 2002 Staff Member Administrator Gold Supporting Member

    May 3, 2002
    My wife and I are buying a house, and in order to get a mortgage we had to pay off a few old debts that were on her credit history. We used two of my credit cards to pay them off right away. We also spent a bit of money on a trip to Ohio for a wedding, and I used one of my credit cards for that as well; I get paid on a monthly basis, so I didn't have the cash on me.

    My FICO score must have been updated right at the peak of all of this, because it jumped from 722 all the way down to 631. When I got back home and got my paycheck, I went ahead and paid off most of what was spent. It was just updated again three days ago and it's gotten back up to 672- not great, but better.

    My question is this: This will be the last month I can make a large overpayment to my cards before I have to start paying a mortgage. I'll still be able to pay a good amount more than the minimum balance due, but this will be the last time I can pay four or five hundred dollars more than the minimum. I'd like to get my FICO score back up as high as I can, so I was wondering if I should put all the money towards a card that is close to being maxed out, put it all towards my other card that has a higher credit line that has 2/3rds of the balance already paid off, or split it between the two? I'm not about which has a higher interest rate, as neither of them will begin accruing interest until next July or August, before which time I'll have paid both of them off.

    I had thought that mainting a higher balance would make it appear that the card is "maxed out" and planned on paying half of that one off at once, but I didn't know if this affected the FICO score or not.

    Thanks in advance!
  2. My impression is it doesn't matter how you scatter debt across cards as far as credit score. What they're concerned with is what % of your total available credit you've used, and also the ratio of that debt to your income that matters. I'm no expert though.

    One card maxed with "Z" dollars and 3 cards empty is the same as that same debt spread equally among all 3 cards dollarwise, or equally split re: % of available credit on each card, so they're all "X" % full.

  3. Masher88

    Masher88 Believe in absurdities and you commit atrocities

    May 7, 2005
    Cleveland, OH
    My understanding (in it's simplest form) is that you get a better credit score when you keep balances on you cards. The scoring comes from the people who give out the cards and it does them no good for you to pay off debt every month and robbing them of their interest...which is how they make money. Therfore, you get a bad rating when you pay off cards and they can't make money off you! My lender for my house told me that I did a bad thing by paying off 2 of my credit cards and closing the accounts...he recomended that I apply for another card and put a small balance on it before I apply for the mortgage loan. Doesn't capitalism rule? :eyebrow:
  4. Bryan R. Tyler

    Bryan R. Tyler TalkBass: Usurping My Practice Time Since 2002 Staff Member Administrator Gold Supporting Member

    May 3, 2002
    Thanks for the input Josh- I was actually hoping you'd read this thread :)

    Is there anything else I can do to help up my score? I didn't know if becoming a property owner would have any effect, etc.
  5. Muzique Fann

    Muzique Fann Howzit brah

    Dec 8, 2003
    Kauai, HI
    I used to pull credit reports all day.
    That's great advice. Generally it looks bad the more cards you have - try to transfer some balances and close out a couple of those cards if you can (you'll eventually see your score going back up). And yes, owning property looks great on your credit report. Equifax, Trans Union and Experian are the only major bureaus you should worry about.