Wondering how utilization percentage is calculated for fico scores?

[txbradybunch]

This is going to sound silly - but as a "financial type" I understand that the method can affect the outcome......

I have been working at paying down a bunch of cards that I maxed out when I relocated last year - it has been TOUGH seeing as though I am still paying two house payments! 

So - do they take your total outstanding balances/total available credit to determine utilization? 

8500/19900 =42.7%

Or - do they look at each card individually and average together.... such as:

Home Depot 0% $0/500

Capital One 4% $20/500

Capital One 0% $0/500

Barclays 7.7% $348/4500

and then average all of them together.....?

By my calculations - it would make a small - but positive difference in my utilization to have my 0% to divide by.....

Whereby it might be of value to both my fico score and $$$$ to transfer a balance from a high interest rate 44% utilized card to a low balance transfer interest rate on another card that has 8% utilized?  (I could transfer balances from 2 cards that are high interest rates (20%'s range) to a 3.99% offer on on card - getting two more 0% utilization cards and one now at 65% istead of 8% AND the added benefit of the lower interest rate so I can pay off the balance sooner with less overall interest expense.

Clear as mud?

[KingAdrock]

Both your overall util% and the util% on each account are considered into your score. To use your example:

Home Depot $0/500 0%

Capital One $20/500 4%

Capital One $0/500 0%

Barclays $348/4500 7.7%

So overall 368/6000= 6.1% utilization.

For the highest possible FICO, you want more than half of your account to show a zero balance, and <10% util on each card with a balance, as well as <10% combined.

Moving a balance from a high interest rate to a low one is good for your wallet, but as far as whether or not a BT will affect your FICO positively, there's really no way to know unless we get more information. Does the card you're transfering to have a higher CL? What would the new util% be after the transfer?

[GregB]

That won't work directly. You must pay off the 8% utilized card so the balance is zero. Otherwise when you do the BT at 3.99% all of your payments will go to the 3.99% balance. You will pay the full interest on your existing balance until the very end.