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Frequent Contributor
Posts: 496
Registered: ‎11-13-2012
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Utilization Theories

With so many theories about the best utilization to keep on a card, usually ranging from 1% to 10%, is there any advantage to allowing a card to report to the CB's a higher, like ~70% utilization, then pay it down the following month followed by sustained low utilization?  It seems to me if we robotically report minimam utilization it also seems unnatural.  We spend to get points, cash back, cover a short period, whatever the reason, wouldn't an occasional spike show you're human?  Most importantly, would it benefit your score?


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Because the chicks dig it when I throw down the card to the waiter and...it comes in handy if I'm short on cash until payday and need a short spot. AMEX gets the booty, and that's important when you're a Pirate.


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Regular Contributor
Posts: 168
Registered: ‎12-05-2007
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Re: Utilization Theories

I believe the same example works for me too. when I pay down a card slowly my score goes up faster. Crazy but seems true.

Starting Score: 5/2012 TU 595, EQ 565, EX fako 547
Current Score:as of 9/2012, TU 626,Walmart 612, EQ 600, EX fako 623
Goal Score: 640 by dec 2013
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Frequent Contributor
Posts: 288
Registered: ‎02-06-2012
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Re: Utilization Theories

[ Edited ]

I have a feeling what is said on here is getting to you a bit. Most people most certainly dont follow that robotic utilization method in the real world

Established Contributor
Posts: 760
Registered: ‎02-11-2012
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Re: Utilization Theories

The lower your Fico scores, the more that any little change impacts your results up or down, an increase in your AAOA, inquiries dropping, late payments ageing, etc.  For example, I am running at  17% utilization this month bc of some large purchases. My scores have not changed. What impacted my score more was using several credit cards 5, an auto and home loan. The reported negative"too many accounts with balances" showed up. After paying the cc accounts and shelfing a couple of my lesser used cards,  the negative reporting item will not show up and my score will rebound.

Starting scores 01/02/2012 EQ 707(Fico) TU 733(Fico) EXP 735 (FAKO)
Updated scores 06/01/2014 EQ 797(Fico) TU 768(Fico) EXP 769 (Fico), EQ 849 (Next Gen 5/27/14 Penfed)


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Valued Contributor
Posts: 1,128
Registered: ‎10-15-2011
0

Re: Utilization Theories

Utilization in regards to your credit report actually does not have a history.  40% is the recommended for people without any serious deliquencies or bankruptcies and 20% for those that do.  This part of your score changes as you decrease or increase the balances on your account.  One aspect of it is also the amount on one card.  If that one account is way too high then it can have a bit of an impact on your score too.  I actually read most of this right from FICO!



Rethink every purchase you make, before you make it. Use the card with the best rewards. Pay in full each month. Redeem rewards often. Use the cards online shopping for more discounts. Smile, knowing that being thrifty allows you to actually get more out of the same amount of money!
Moderator Emeritus
Posts: 7,225
Registered: ‎09-16-2011
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Re: Utilization Theories

Hi there!

 

I'm going to step outside the box and state that I don't follow the robotic utilization patterns unless I'm going to be applying for something in that month.  Certainly if the scores are very important and if you want to minimize utilization as a game, then following the utilization pattern of <9% utilization on one card and all other cards reporting a zero balance will give you the desired results.

 

What I do try to do is keep all of my spending on my Amex charge card, which doesn't impact my utilizations.   The benefit to letting a balance report depends on the lender. If your total CL on a card is 4k, and your highest balance ever reported on the card is $350, then why would that creditor or any other creditor be tempted to give you higher limits?

 

If you can show that you use your current lines reponsibly, then you can get higher limits in the future.  Irresponsible behavior such as "maxing out" cards, and missing payments or only paying the minumums should be avoided at all costs.

 

that's my 2 cents worth!


Starting Score: 08/29/2011 TU 671 EQ 674
Current Score: TU 754 EQ 694 EX 697
Wallet: NFCU Visa Sig 25k, Amex Lowes 22k, NavCheck 15k, Amex PRG, Amex Zync, Discover It 13.5k, Amazon Visa 5k
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Established Contributor
Posts: 573
Registered: ‎02-12-2011
0

Re: Utilization Theories

I think the theories are just that and we'll never ultimately know exactly how this thing works. Honestly the scoring model is probably a better kept secret than a Coca-Cola recipe. While I think some aspects of it should be eyes only, some of it should also give people an understanding. You can't play right if you don't know the rules. 



Starting Score: EQ: 383 2/2011
Current Score: TU: 644 EQ: 648 EX: 6?? 2/2015
Goal Score: 700


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Valued Contributor
Posts: 2,682
Registered: ‎07-29-2009
0

Re: Utilization Theories


bettercreditguy1 wrote:

The lower your Fico scores, the more that any little change impacts your results up or down, an increase in your AAOA, inquiries dropping, late payments ageing, etc.  For example, I am running at  17% utilization this month bc of some large purchases. My scores have not changed. What impacted my score more was using several credit cards 5, an auto and home loan. The reported negative"too many accounts with balances" showed up. After paying the cc accounts and shelfing a couple of my lesser used cards,  the negative reporting item will not show up and my score will rebound.


I agree that the number of balances matter. If I have to show a credit card balance or balances, I try to do it on the minimum number of cards. There is no reason to show a small balance on a bunch of different cards. Showing too many balances WILL impact your score negatively.

Senior Contributor
Posts: 6,260
Registered: ‎08-16-2012
0

Re: Utilization Theories

Yes, num of bals def matter, even if you pif! I let a couple teenyyy weennyyy bals report so that my clis would report (5.90 on my new $5900 JCP card; cli'ed from 4900 for ex.) and I got denied a cli by barclay's with that laaaammmeee excuse. I only use like 5-6 of my cards in a given month unless I need them to report a cli., and I usually pif except some 0% offers.
Marriott PR$25k | BCE $24.5K |BankAmericard Visa $25k| BOA Better Bal $17.5k |Wmt Discover $12.5k | BR Visa $17.5k | Amex Delta Gold $10k | Discover IT $10k | Paypal Extras MC $15k | Amazon Store $10k|Smile Gen $7.25k | Dillard's $10k | West Elm $4k| Express $3.05K | Mypoints.com Visa $4.5k | Freedom Visa $1k| Amex Surpass $1k
Valued Member
Posts: 68
Registered: ‎09-10-2012
0

Re: Utilization Theories


webhopper wrote:

Hi there!

 

I'm going to step outside the box and state that I don't follow the robotic utilization patterns unless I'm going to be applying for something in that month.  Certainly if the scores are very important and if you want to minimize utilization as a game, then following the utilization pattern of <9% utilization on one card and all other cards reporting a zero balance will give you the desired results.

 

What I do try to do is keep all of my spending on my Amex charge card, which doesn't impact my utilizations.   The benefit to letting a balance report depends on the lender. If your total CL on a card is 4k, and your highest balance ever reported on the card is $350, then why would that creditor or any other creditor be tempted to give you higher limits?

 

If you can show that you use your current lines reponsibly, then you can get higher limits in the future.  Irresponsible behavior such as "maxing out" cards, and missing payments or only paying the minumums should be avoided at all costs.

 

that's my 2 cents worth!


I agree with most of what your saying. There is, however, a minor detail that should be discussed. You mentioned a category on ones CR called "Highest Balance". I would not look to FICO for such answers, assuming you did. I would call one of the big three CB and ask if a lender has access to view that category. My understanding is, lenders do not have access to view that category. 

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