Which card to pay, for best FICO result?

[charliemike73]

Hi,
I have a couple credit cards, with no delinquencies on my record, but high balances affecting my FICO.

Card #1: The higher balance @ $8,000 with an unlimited credit limit and a $15,000 *soft* credit limit. This card also has a significantly higher APR of 10%.
This card is also reported as $0 credit line on my credit report - is that normal for an unlimited?

Card #2: Is a $11,000 credit limit with $6,000 balance and an APR of 4.6%.
This card is used for my day-to-day expenses and always recieves more than the minimum + new charges for the month, so this balance is on a consistant reduction.


Neither cards APR is an introductory rate so there is no time constraint to consider.

So my question is...
Will paying a lump sum ($4,000) on card #1 return a better FICO result than paying a lump sum on card #2. This question comes about because of the $0 credit limit reported on my credit report for card #1. Normally you would go with the higher balance and APR to reduce your overall interest payments, but I am only concerned with which will best improve my FICO!

[kork13]

Originally Posted by charliemike73

This card is also reported as $0 credit line on my credit report - is that normal for an unlimited?

Yes, that is completely normal. This is why unlimited credit lines are bad for your credit. Unlimited lines were developed for the wealthy, whose credit ratings don't matter--they're known to hold large assets, and really could pay cash if necessary--the credit line is for convenience's sake. For the normal person, though, they're killer. Your credit ratio is a $14k balance with a $11k credit line--127% usage. Especially if you're concerned with your score, I would stop using this card completely. Plus, it's got the higher rate, which as you said, is costing you much more interest than the other.

Originally Posted by charliemike73

So my question is...
Will paying a lump sum ($4,000) on card #1 return a better FICO result than paying a lump sum on card #2. This question comes about because of the $0 credit limit reported on my credit report for card #1. Normally you would go with the higher balance and APR to reduce your overall interest payments, but I am only concerned with which will best improve my FICO!

The best strictly FICO result? It might be to pay down card #2, because that individual card will show a lower credit utilization ratio (card #1 doesn't have one). However, that is very short-sighted. The best long-term solution is to get rid of the card with the unlimited (non-existent) credit line, because it's always going to hurt your score.

[boosami]

If your credit report shows "$0" for the limit on your no-limit card, FICO will use your highest reported balance as the limit for utilization calculations. What has you highest balance been? Calculate utilization with that number.

No matter where you put it, it will lower your total utilization the same amount. The next main factor in your score would be to get utilization down under 50% for each card. If possible, pay to both the cards to get utilization for each under 50%.

Example (assuming $15K on Card #1 is the max balance):

Utilization on #1: $8K/$15K = 53%
Utilization on #2: $6K/$11K = 55%
Total Utilization: $14K/$26K = 54%

1) Pay $2,200 on Card #1 to bring utilization to 38%
2) Pay $1,800 on Card #2 to bring utilization to 38%
Utilization on #1: $8K/$8K = 38%
Utilization on #2: $6K/$11K = 38%
Total Utilization: $10K/$26K = 38%

Your next goal should be getting them under 30% utilization. Good luck!