Utilization

[Greene718]

Can someone explain to me exactly what is Utilization? not sure what it is and what my precent should be

[Anonymous]

Check  http://ficoforums.myfico.com/t5/forums/searchpage/tab/message?q=calculate+utilization+#message-list

[MarineVietVet]

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@Greene718 wrote:

Can someone explain to me exactly what is Utilization? not sure what it is and what my precent should be

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It's actually very simple because even I can understand it.    You divide your total CC balances by your total CC credit limits. This will give you a percentage of usage. Utilization of revolving credit is 30% of your FICO score so it's looked at very closely. Issuers get nervous when the usage goes up. FICO scores not only overall utilization but individual account usage so keep that in mind as you move forward. The consensus seems to be to have no more than half your revolving accounts report a utilization of 1-9% each month. The other cards should show a zero balance. Hope this helps.

From a BK years ago to:
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802
3/10 EQ- 800

You can do the same thing with hard work

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[Wolf3]

For FICO scoring it is relative thing.  Percentages vary with scoring systems.  In general:

Less than 10% is better than 30% which is better than 50% which is better than  80% which is better than maxed out.  

[UtahEngineer]

My impression is, credit card utilization calculations are based on your balances as of the closing date(s), and FICO doesn't know or care if you pay it in full during the grace period or not.   Next, they'll ding you for not using your credit cards at all (zero balance on closing date), and they'll ding you for having balances on more than one card.   Plus, you don't get any available credit dollars assigned to any of your signature cards (cards without a fixed reporting limit). 

The strategy that has maximized our scores is:

  • pay all credit cards except one (using on-line banking transfers) BEFORE their closing dates down to a zero balance.

  • for that final card, pay it BEFORE its closing date down to anywhere from $1 to $100.

I do this 4 times per year (for example, in June, because the June statements are used to send me my member's quarterly July FICO score).  I would also do it for any month where I knew my credit was going to be pulled by a lender or insurance company the next month.

[Anonymous]

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@UtahEngineer wrote:

Next, they'll ding you for not using your credit cards at all (zero balance on closing date),

and they'll ding you for having balances on more than one card.    

  • for that final card, pay it BEFORE its closing date down to anywhere from $1 to $100.

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Hi UtahEngineer,

Nice post!

My experience is pretty close to yours.

However, some CRA's ding you for reporting zero on all cards, others don't (minor score ding)

You may see a score hit if you report a balance on more than half of your accounts - the exact number will vary depending on your report

And for that final card, depending on your CL, many advise to pay it down to less than 9% of CL for best results

Of course, YMMV for all of the above.

Looks like you've been taking very good care of your credit!

[smallfry]

In my recent experience with a clean report I have noted the following. Best score for Equifax is 1 card with a balance. I lose points for 2 more with 3 reporting.

Transunion supposedly likes 0 cards reporting I can't say I haven't done that yet. They score the same for 1 or 2 reporting balances I lose points with 3 reporting.

Obviously we're talking 1% overall utilization no more than 5% utilization on any 1 card reported balance.