I am wondering how this works from a credit score standpoint: I have 6 credit cards totaling 12k in debt. I was thinking of transferring the balances of all of them to one card, so I only have one payment to make. I will have one card maxed, and 5 empty. Is this a good or bad decision, as far as my credit report goes?
Sorry, that's incorrect. FICO does look at the overall debt to credit limit ratio; but it also looks at the ratio of debt to credit limit on each card. When you transfer balances from various cards to a single card, your FICO will *DEFINITELY* take a dump. I can guarantee you that! FICO does not seem to like a zero balance on any card. It prefers to see at least $1 balance on each card, and then that the debt/CL ratio on each card to be less than 20%. But then, what's the aim? Is it to lower the overall interest rate (and thus total interest paid) ? Or is it to attain the maximum FICO score possible? If it is the former, forget FICO and make a decision that's financially prudent for your own situation. If it it is the latter, as may be the case if you are about to apply for a mortgage and want to maximize FICO, distribute your debt among various cards with no card's debt-CL ratio being more than 20%. Best of luck. -- lakpr
Re: Re: Question - Credit Cards and FICO Also, here is a quick way to increase your FICO. Ask your current creditors if they can increase your credit limits. Your debt/CL ratio will decrease... Some of them will pull hard inquiries on your reports that negates the whole purpose of this exercise, so please be sure to ask them upfront if a credit report is going to be pulled. Citibank gave me a $1000 increase in CL without pulling credit report; the rep said she would have to pull CR for my requested increase of $2500, and that it's going to be a hard inquiry. Best of luck, -- lakpr
I actually am just lazy and would prefer to make out one bill each month instead of six, seeing as how all my cards carry the same rate. However, I would like to get pre-approved for a mortgage quite soon, and I don't want my FICO to take a hit. Thanks for the help.
How literal is that advice? If I went to the store to charge $1.00 on each of my dormant credit cards, are you telling me that it would be better for my score than $0.00? Would $1.00 really make a difference, or do I need $100.00? Buckets
Based on past threads, that advice is 100% literal: $1 scores differently than $0. $1 is "carrying a balance" while $0 isn't.
WITH RNG IT IS HARD TO SAY WHAT F.I.C.O. DOES...I paid $30,000 in credit card DEBT in one month and took a BIG "HIT"...I still have not gained it back...I am thinkin' I may just make that $30,000 go back on the cards... I'M 64 POINTS UNDER MY "HIGH"...AND I DON'T THINK I WILL EVER SEE 800!!!
I guess I'll dust off the credit cards in my sock drawer and take them to the store to buy a bottle of soda every once in a while. I bet the corner convenience store will love me. Buckets
Re: Re: Question - Credit Cards and FICO Use a different one of your "UNUSED" cards...one time for a tank of gas...PAY IT IN FULL...put it on the bottom of the pile...the next month use the second card...I really don't think it is LOGICAL to spend only $1.00 on ALL the cards every month... ...BUT you MUST use your card once or twice a year...OR they may just refuse to renew it...
