9% is "heavy use" ... and how much medical collections hurt?

[BuffaloBoy]

I'm a 626/626/610 

Reasons it says:

You've made heavy use of your available revolving credit - 9%
You have a serious delinquency (60 days past due or greater) - 1 Account
You have a short credit history - 3 year

For the short credit history, I'm thinking of having my mother-in-law put me as an authorized user on her 15 year old, perfectly paid credit card. And the 60 day late, I can't do anything about.

But 9% is heavy use???

Last thing - I do have one collection for $127 (medical). How much is this hurting me?

[MarineVietVet]

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@BuffaloBoy wrote:

I'm a 626/626/610 

Reasons it says:

You've made heavy use of your available revolving credit - 9%
You have a serious delinquency (60 days past due or greater) - 1 Account
You have a short credit history - 3 year

For the short credit history, I'm thinking of having my mother-in-law put me as an authorized user on her 15 year old, perfectly paid credit card. And the 60 day late, I can't do anything about.

But 9% is heavy use???

Last thing - I do have one collection for $127 (medical). How much is this hurting me?

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How old is each of these negatives? Age has much to do as far as the impact of negatives. The farther away you are from that 60 day late and the collection the less and less it will hurt but the collection is a major derogatory and will hurt for most if not all of it's reporting period.

Being added as an AU can help IF the account is older than any of yours (older than your current AAoA is even better), IF the payment history is long and clean, IF the utilization is very low, and IF it will report to the CRA's. Not all cards will do this. You need to ask the company first. You will inherit the entire history of this account. One caveat however; if this account starts to go south your credit will be affected as well. Keep that in mind.

As far as 9% utilization being a "heavy" use of credit the scoring gods can be very fickle. I wouldn't be very concerned about that particular comment.

Everyone's situation is different and there is no one size fits all approach to this and therefore no "ideal" number but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.

I hope some of this helps.

[CreditDunce]

Utilization is calculated two ways.  The first is overall utilization.  The second is on each revolving TL.  If you have an overall utilization of 9%, but one CC is reporting a utilization of 40%, then your utilization is hurting your score.  It is also possible, the utilization was thrown in because they needed one more reason.  It may not really be hurting your score.

As the other poster said, the AU account may not help you.  There are two main hurdles.  The first is the CCC must report it to the CRA's and the CRA's must match it to your account. Most CCC's will report AU's, but not all ask for a SSN.  If they don't use your SSN, then it is likely not to be matched unless you live with your mother in law.

The second hurdle is the CRA's have to believe it is a legitimate AU account.  No one talking knows the criteria, but it probably involves last name, same address, etc.   FICO 04 models are much more likely to use an AU account.  FICO 08 models are much less likely to include the AU account.  Many internal scoring models (e.g. Chase) completely ignore all AU accounts.

AU accounts are most useful when applying for a mortgage or to help one of your kids establish credit for the first time.  Some mortgage lenders may disallow an AU account, but not all do.

Your credit age is not good, but it is not bad.  The biggest thing hurting your score is the CO.  A CO for any amount is considered a major derog.  In FICO 9, the medical CO will not hurt as much, but FICO 9 is not used yet.  The 60 day late just makes matters worse. 

The best thing you can do for your score is visit the rebuilding section and see what options you may have.   Addressing the baddies should be your main concern.  Adding positive accounts will not remove the negative derog's on your credit report.