Explain 9% uti for optimal FICO

[jamie123]

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@Anonymous wrote:

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@jamie123 wrote:

The ONLY time you really need to do this is if you are applying for NEW credit in the next month or if you are interested in seeing how high you can tweek your scores.

It becomes a part time hobby and quite a lot of work and juggling to do this ALL the time.

Here is how you do it:

You designate one CC as your reporting CC that will report less than 9% of the grand total of all your CC credit lines. (Add all your CC credit lines together and muliply by .09, this will be the number you CANNOT exceed each month.)(Example: $1000 + $2000 + $300 + $700 = $4000 then $4000 X .09 = $360 )(In this example you CANNOT exceed $360 reporting on one CC)

Pay your ZERO balance cards off in full a day or two BEFORE each cards due date. After you make this payment you CANNOT use this card until it reports a zero balance to the CRAs. This will USUALLY occur within 4 days AFTER the due date.

When it comes time to pay your reporting card you do the same thing except you leave a balance that is less than 9% of overall CC credit lines. To prevent paying interest on this card you might want to make two payments per month on this card. Once it reports the less than 9% UTI, go back and pay the balance down to zero.

Some people are amazed at just how many points you can pick-up this way instead of having even minor small balances reporting on several cards. If your current reporting UTI  is above 10% and spread over 50% of your cards it will make a really big difference in your scores.

Hope this explanation was clear enough.

Any questions?

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very useful informatin.

One question, can we keep reporting balance of 9% of highest limit cc? I am just afraid of keeping 360 balance on lowest limit card, e.g cc with 700. This will report 50% utilization on 700 cc. Rather i would like to keep balance of 180 on cc with limit 2000. Whats ur thougts?

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Yes, your $2000 card can be used. Remember, it is less than 9% not $360. $360 was just for my example.

You could actually use any number between 1% and 9%.

[HenryJumbo]

No offense but I have a better FICO score (from myfico.com) than a lot you who are posting about this so-called "method". Here's what works for me, (1) I only buy what I can afford, (2) I PIF, sometimes before and sometimes after the statement date, but always before the due date.

This still makes absolutely no sense to me. Why would FICO penalize you for spreading out balances (under 10% for example) across different cards and PIF then before state or due date. In my personal experience keeping utility under 10% is what works.

Back to my example, if I have a card with $2000 and $2400 CL using only 10% of the $2400 card =  $240 and holding a zero balance on the $2000 card makes the total utilization a little over 5%.

To recap that's 10% utilization on an individual card and 5% total

That's a neat little trick but I could just as well split the $240 between the two cards and end up with the exact same utilization for total CL and an even smaller utilization for the card individually.

To recap that's 6% utilization on the $2000 card and 5% both less than 10% individually. And the same (little more 5%) total utilization.

[cashnocredit]

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@HenryJumbo wrote:

No offense but I have a better FICO score (from myfico.com) than a lot you who are posting about this so-called "method". Here's what works for me, (1) I only buy what I can afford, (2) I PIF, sometimes before and sometimes after the statement date, but always before the due date.

This still makes absolutely no sense to me. Why would FICO penalize you for spreading out balances (under 10% for example) across different cards and PIF then before state or due date. In my personal experience keeping utility under 10% is what works.

Back to my example, if I have a card with $2000 and $2400 CL using only 10% of the $2400 card =  $240 and holding a zero balance on the $2000 card makes the total utilization a little over 5%.

To recap that's 10% utilization on an individual card and 5% total

That's a neat little trick but I could just as well split the $240 between the two cards and end up with the exact same utilization for total CL and an even smaller utilization for the card individually.

To recap that's 6% utilization on the $2000 card and 5% both less than 10% individually. And the same (little more 5%) total utilization.

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FICO scores are not derived by humans thinking about what makes sense. They are based on the statistics of an extremely large, randomly selected, set of consumers. Also, we are talking about minor score variations. Not paying your bills on time will produce an order of magnitude lowering of scores. Carrying an overall UTIL of 20% on one card is far worse than having an overall 10% UTIL spread out over all your cards.

When you app for a mortgage it can make sense to do everything possible to maximize FICO since that sets your interest rate and it will add up.

BTW, I've never bought anything I couldn't pay for. In fact I lived on checks and a single debit card for close to 20 years. When I first checked my credit score it was in the low 500's and was only that high because a month earlier a bank account I opened gave me an automatic OD 1k line without a credit pull and I wasn't even aware of it until I pulled my credit. They did pull Chex but that was clean. It was so low because I didn't have nay other credit and had failed to turn off some utilities when I moved. The utils went to collection by the time I realized the bills were accruing.

[jamie123]

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@HenryJumbo wrote:

No offense but I have a better FICO score (from myfico.com) than a lot you who are posting about this so-called "method". Here's what works for me, (1) I only buy what I can afford, (2) I PIF, sometimes before and sometimes after the statement date, but always before the due date.

This still makes absolutely no sense to me. Why would FICO penalize you for spreading out balances (under 10% for example) across different cards and PIF then before state or due date. In my personal experience keeping utility under 10% is what works.

Back to my example, if I have a card with $2000 and $2400 CL using only 10% of the $2400 card =  $240 and holding a zero balance on the $2000 card makes the total utilization a little over 5%.

To recap that's 10% utilization on an individual card and 5% total

That's a neat little trick but I could just as well split the $240 between the two cards and end up with the exact same utilization for total CL and an even smaller utilization for the card individually.

To recap that's 6% utilization on the $2000 card and 5% both less than 10% individually. And the same (little more 5%) total utilization.

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HenryJumbo,

I don't know why, but if you have more than ONE card reporting a balance FICO penalizes you a few points for each additional card that reports a balance. Like the other poster mentioned it may not be many points but it may get you into the next lower interest rate bracket for a loan. I know that probably doesn't mean much to you because you already have an OUTSTANDING score and get the lowest rates. It matters to us trying to rebuild our credit.

Oh....I almost forgot to mention this....

I haven't used ANY credit in the last eight years. My scores are low because I just started building credit. I always paid with cash, debit card or check.

[creditnocash]

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@jamie123 wrote:

Alright I'll explain a little more.

Payment Due Date: This is the date printed on the bottom of your statement informing you by which date you must make at least the minimum payment.

Reporting Date: This is when the creditor reports your payment and balance to the CRAs. This USUALLY happens 3 to 4 days AFTER the payment due date.

Statement Date: The day that a new statement is generated for the next month. This USUALLY happens 3 to 4 days AFTER  the payment due date and is USUALLY the same as the reporting date.

It kind of looks like this:

Payment Due Date August 10, 2012 >>>>>>>>>>>>>>3 to 4 days pass>>>>>>>>>>>>>>>>>>Reporting Date and Statement Date.

Then next month:

Payment Due Date September 10, 2012 >>>>>>>>>>>3 to 4 days pass>>>>>>>>>>>>>>>>>>Reporting Date and Statement Date.

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hope this is right. was waiting to get paid to pay off my ae card. yesterday the 10th. 

well got paid and was auto scheduled to go out that day.

statment came out same day. 

payment due date says sept 9th but last credited amount was the 10th for the full amount. 

edit: ughh same thing happened with chase freedom 257 balance posted on statement dated today but its already paid off. 

this would be of the example on how not too pay your cards for optimization.