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Question: How is Credit Utilization calculated and effects Credit Score?

I have a few questions regarding how credit utilization affects the Credit Score.

1. I have a mortgage that I barely started to pay off, does this have negative effect on my Credit Score?

2. I have a bunch of credit cards, but all the balance is on two of them, so I'm using up near 90% of credit on these 2 credit cards, but less then 30% of my overall available credit is used. Would it be better for credit utiliztion if I spread the balance evenly between all the credit cards instead?

3. Similar to my mortgage question above. If I get an equity line of credit, for let's say $20K, and immediately use up $15K, how would it affect my credit utilization and Credit Score respectively?

Thank you very much!

Answer: Utilization counts for 30% of your score and how it affects it is how much debt that you have versus how much available credit that you have. So to answer the questions in the order that you asked:

1. A mortgage does affect your score (utilization), but it does have a positive effect on the type of credit you have. (which is 10% of your score)

2. Whether you have it spread out on 2 or all of them, it doesn't matter actually. Me myself, I would keep them all at a 0 balance. There's no need to pay extra money (in interest) on something that I could've paid off a long time ago. That money could be reallocated towards other things.

3. If you're barely paying off the mortgage, what would you want to borrow against the equity for? I would be cautious about borrowing against the equity of your home. Anytime that you would use up 3/4 of any credit line, it's going to drop your score.

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