Scenario 1:

  • Two Credit cards have 50% utilization rate each
  • Interest savings are moderate
  • Convenience factor - medium

Scenario 2:

  • One card has 90% utilization rate.
  • Interest savings are higher as there's a cap on Balance transfer fee
  • Convenience factor - high, as payments need to be made to just a single source

Scenario 3:

  • Four cards have 20% utilization rate each
  • Interest savings are lower
  • Convenience factor - low, as payments need to be made to multiple sources

Assuming that in each scenario, the rest of the cards have <10% utilization rate, what's the relative order of the above scenarios based on the highest impact (detrimental) on credit scores (Specifically for FICO)?


1 Answer 1


First off, don't carry a balance on your credit cards. Pay them in full each month and your credit score will increase.

Second, if you have to carry a balance, do it on a 0% card. (At least one card exists with a 15 month intro 0% on balance transfers AND new purchases, with no balance transfer fees for 60 days. Hint the card is from one of the big name CCC's and is marketed as helping people eliminate credit card debt and get credit score back on track, providing something of a clean slate.) In this situation you do not need to be exercising any new credit until the balance is paid. Utilization > 30% on any card or overall will lower your score, but this lowering is without memory, i.e. the effect is not cumulative. So over utilization does not have a cumulative effect, instead, the effect remains until the cause is removed, then the effect disappears.

So, to answer your question with anecdotal evidence, in my case the new available balance triggered a jump while my balances were in transit, then my score dropped back down when they registered again the following month. (620 -> 710 -> 630).

But if you have to choose between scenarios, the third one will provide the best credit score. Assuming all cards have the same interest rates, you'll be paying the same amount each month. Minimum payments will be greatest with #3 as well, but minimum payments are a sucker bet, because they typically lead to 30 year repayment plans.

  • +1 from me. Nice detailed answer, esp given the question requires a bit of speculation. Almost to the point of "opinion" as FICO doesn't fully disclose formula. Nov 30, 2017 at 10:42
  • I've digested and used the standard advice on "How to improve your credit score." reddit.com/r/personalfinance has an excellent wiki which includes very detailed advice on managing PF, credit scores and how they work and how to improve yours, how to deal with collections. Lots of the stuff we see here as FAQs.
    – Xalorous
    Nov 30, 2017 at 13:55

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