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How much does utilization really affect Credit Scores?

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Long story short.

 

I have been working on cleaning up my credit for more than a year. I have been fortunate to obtain about 6 or 7 new credit cards, NFCU (2), Cap One (2), Hooters and other store cards. Last month, I added a mortgage to the fold.

 

No lates on anything. Olld collections have been paid (more than a year ago) -- 2 outstanding, but are due to drop off early next year.

 

Things are progressing, but my credit scores are SOOOO low. EX: 590 EQ: 610 TU: 618 . I will admit that my utilization is high. I am doing a debt snowball method to pay it down... but I'm just getting so impatient. I'm hoping to see an improvement in my scores within 6 months. Is it possible?

 

In addition, I have about 40 inquiries and I'm not planning on applying for any credit cards in 2009.

 

Can anyone offer any guidance and/or support? Any advice is greatly appreciated!

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35%

 

+1

 

.35(850-350) = 165 Maximum points available for "ideal" utilization (under 10% total, spread across very few cards? -- nobody knows for certain)

 

If one assumed a linear relationship between best (165) and worst (0) possible scores, then each 10% reduction would be worth ~17 points. Anecdotal evidence, though, would suggest that there are certain important thresholds below which the score bump is well beyond what would be expected using a straight linear relationship (under 50%, under 35%, under 20%, under 10% -- again, nobody REALLY knows.

 

When my utilization went from 90% to under 20%, my FICO went up 65 points. YMMV

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OP, you'll get there :) .........

 

High utilization is a KILLER, but as you paydown your balances, things will improve.

 

40 Inquiries???? Tooooooooo many. I agree with your moratorium for 2009.

 

Cycle your new cards occasionally but ALWAYS pay them in full. Otherwise, you should be operating on a cash basis without adding even $1 to your balances.

 

 

Best of Luck!!!!!!!

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Jack, yes the majority are hard pulls.

 

Thanks all for the breakdowns and encouragement. I look forward to providing you all with positive updates!

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Just remember, these are the top 2 FICO factors..

 

1. Paying on time

 

2. Paying down revolving balances.

 

Those can affect your score more than a CA, in my experience.

 

Took me forever to realize that.

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Don't get discouraged EVER!!!! I started with over $100k in debt when I started my debt snowball program and the spreadsheet said it would take 2 years and 6 months to pay everything off. When I started I thought no way would I ever accomplish this and I too was discouraged. So I planned a trip to Bhutan, Nepal and Tibet that I would take the month I was scheduled to pay off all my debt. When I started it was I will go on my trip in 2 years, last year it was next year I will go on my trip, well now that it is 2009 I am going in 12 months! Looking back I can't believe I made it through those 2 years. Now I am biting at the bit to get things paid off. I started working for a new company and I get a small bonus next month which I am going to sign directly over to Visa. All of my credit cards should be paid off by April which is just a few months away and then the bank of mom gets 82% of my take home pay until the end of the year when she will be paid off. So don't get discouraged!

 

My biggest jumps in credit scores happened when I get below 50% utilization on across the board on all of my cards. I had one card with $25k BT at 3.9% for life so that card was always at max utilization but today it is down to the magical 10% utilization and now all 3 of my scores are over 700. I am waiting to see if they increase more in a few months when I have everything paid off.

 

Good luck on getting everything paid off and stick to your goal. Try setting a present for yourself when you accomplish your goal which makes it a little more bearable.

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