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As far as I understand, paying off debt (talking credit cards here) helps your score because low utilized available rolling debt vs total limit is good. _Closin
by schrectacular 3y ago
As far as I understand, paying off debt (talking credit cards here) helps your score because low utilized available rolling debt vs total limit is good. _Closing_ a CC account hurts because it lowers your available rolling credit limit. Paying off a debt like a mortgage is good, it lowers your debt-to-income ratio.
- stonogo 3y agoNo, that's what I'm saying here: having too low a debt to credit-limit ratio (i.e. high-limit cards with no debt on them, termed 'credit utilization') can hurt your FICO score. From what I can tell, a credit utilization around 10-20% is optimal for FICO, but a credit utilization of, say, zero, will hurt.
- addicted 3y agoI hear this quite a bit but is there any evidence for it? I personally had a couple of months where my utilization was 0 and my score jumped by about 10 points (and it’s already relatively high). Most online experts recommend a credit utilization below 10% and I’ve not come across one recommending a minimum utilization.
- esotericimpl 3y ago[dead]
- stonogo 3y agoThere's no evidence for any of it, because they're coy about the FICO rules, but if it's bullshit, it's bullshit straight from the horse's mouth [1]. I know that previously in my own credit reports I was given this specific 'justification' in the 'things that are lowering your score' column. 1 - https://www.experian.com/blogs/ask-experian/what-is-the-best-percentile-for-credit-utilization/ https://www.experian.com/blogs/ask-experian/what-is-the-best...
- rockemsockem 3y agoPretty sure that's complete BS, I have a great credit score and a few cards that I barely use alongside a few that I use quite often.