UTIL: 29% for 11 mo. then 9% 1 mo. VS 9% for 12 mo.

[Anonymous]

i read a lot about people getting CLI to very large amounts.  i have a fidelity amex at 7,500 and chase freedom at 4,000.  this more than meets my needs, as my monthly credit expenses rarely exceed $2,000 (split pretty evenly between the two cards), and assures a UTIL of <29% (2,000/11,500 = 18%).  anytime i pull an INQ for a loan or card, i always pay one card off in full the month before the INQ and leave the other one at 9% to optimize the score pulled in the INQ.  i hope this actually happens and isn't just an inconveniencing wive's tale.

so i'm just wondering if your credit score were based solely on UTIL assuming you have just 1 credit card, how would these scenarios compare:

1. 29% UTIL for 12 months, then pull

2. 29% UTIL for 11 months and then the last month at 9%, then pull

3. 9% for all 12 months, then pull

curious how much a 29% UTIL hurts you when compared to a 9% UTIL, and especially so if you drop the UTIL to 9% in the last month of otherwise 29% UTILs.

[Anonymous]

From what I understand, it doesn't matter at all how long you've had the util%. All that matters is what your current utilization is as of the report date.

In other words, unless I'm mistaken, always having a 9% utilization for 12 months would be the exact same as having 90% util for 11mos and then dropping it down to 9% the last month before the report. As soon as the util% goes down, your scores goes up.

[Anonymous]

In other words, unless I'm mistaken, always having a 9% utilization for 12 months would be the exact same as having 90% util for 11mos and then dropping it down to 9% the last month before the report. As soon as the util% goes down, your scores goes up.

^^^^Anyone else know if this is correct? Curious myself.

[Juan123]

that sounds right, i've never seen anywhere about history of credit util. just your current one.

[HoldingOntoHope]

The previous information is correct. There is not actually a stored "Credit Score" at any of the bureaus. The only time a score is generated is upon a request for the report. At that time the current information stored at the bureau is pulled and run through whichever scoring algorithm is being used (FICO / Vantage / etc.). The reason for the difference in scores between FICO and FAKO's is the different scoring algorithm. Same thing with different versions of the FICO algorithm such as auto enhanced or TU98 vs. TU04.

The idea that your score is maximized by utilization being below 9% is a proven fact based on members experiences and also on the educational items available from FICO on how to maximize your score. The actual "Sweet Spot" may vary for each individual. Some have reported maximum score at under 5% others at 5-9%. But not a wide variation.

As a general rule under 9% total utilization and LESS THAN 1/2 of Trade Lines reporting a balance seems to be optimum.

[Anonymous]

thanks for the informational response.  though i must admit it seems a bit odd that so much of a credit score/report is based on credit history EXCEPT utilization.  they look to see how many INQ, how many years of activity, how many revolving accounts, etc.  but they fail to look at previous UTIL.  a little bizarre.

nevertheless it is probably a good idea to at least stay under 29% at all times in case out of nowhere you need to apply for a loan and cannot time it with balancing your cards UTIL precisely at the optimal level.

[MarineVietVet]

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@Anonymous wrote:

thanks for the informational response.  though i must admit it seems a bit odd that so much of a credit score/report is based on credit history EXCEPT utilization.  they look to see how many INQ, how many years of activity, how many revolving accounts, etc.  but they fail to look at previous UTIL.  a little bizarre.

nevertheless it is probably a good idea to at least stay under 29% at all times in case out of nowhere you need to apply for a loan and cannot time it with balancing your cards UTIL precisely at the optimal level.

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This is true for scoring but the month to month utilization can be seen by lenders on your reports which is why managing utilization is so important. If a lender sees someone carrying a high balance (or balances) month after month they might get nervous.

Sometimes it's necessary to separate what FICO looks at and what lenders are interested in.

Also I would try and keep both overall and individual account utilization well under that 29% figure. I think you will find most folks around here (not all) recommend not going over 9% if at all possible. I usually give this advice:

Everyone's situation is different and there is no one size fits all approach to this 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.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[Anonymous]

thanks for the response.  i still wonder just how important 9% vs. 29% is though.  i do option #2 above - 29% all the time unless i'm pulling an INQ, then one card gets 9% and the other 0%.  it has worked great for me in that: 1. it recently got me the lowest APR on an auto loan possible in my area (aside from PenFed, which i am not a member of), and 2. it has allowed me to get two of the best rewards credit cards on the market.  i'm not in the market for a house, so i don't really think there is much better i can do.  i'm just not sure the 9% over 29% is worth the hassle for me personally.  perhaps in the future as my CLIs increase it will be easier to attain the 9% UTIL, but for now it doesn't seem to hurt me too much.

[MarineVietVet]

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@Anonymous wrote:

thanks for the response.  i still wonder just how important 9% vs. 29% is though.  i do option #2 above - 29% all the time unless i'm pulling an INQ, then one card gets 9% and the other 0%.  it has worked great for me in that: 1. it recently got me the lowest APR on an auto loan possible in my area (aside from PenFed, which i am not a member of), and 2. it has allowed me to get two of the best rewards credit cards on the market.  i'm not in the market for a house, so i don't really think there is much better i can do.  i'm just not sure the 9% over 29% is worth the hassle for me personally.  perhaps in the future as my CLIs increase it will be easier to attain the 9% UTIL, but for now it doesn't seem to hurt me too much.

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That's really all that matters. Recommendations and suggestions and advice are what we all seek but in the end we have to find out what works best in our own siutation.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".