Anything magic about util % under 50%??

[MBOhio2]

To make a long story short, because I didn't realize a LOC was being factored into my util %, the 0% util I thought I had is really 54%  I was planning to apply for a mortgage and needed my score to increase up to 640, but it's not looking good.

It would take about $2K to get my overall util % below 50% (down safely to 49%), which is do-able, but I don't want to part with the reserve $ if it won't help my score. All 4 of my CCs have a $0 but this LOC is rather large and is skewing everything. Is there anything magic about getting under 50% that may provide me with a score boost or is going under 50% the same as going under 70%, 60%, 40%, etc - it will provide the usual, gradual score increase, but nothing more?

At some point I thought I heard that there was often a larger bump for getting under 50% and then getting under 30%.

Thanks!

[RobertEG]

There is only one thing certain.  The higher your % util, the more negative the weighting in FICO.

Exactly what "break points" or ranges FICO deems more significant is not public knowlege.  The details of the FICO scoring algorithm is a proprietary trade secret, and no specifics are published.  All we can go on is anecdotal experience.  Some report seeing more significant boosts at just under 50%, but I would not bank of those experiences, as they could have resulted from other, concurrent changes in their credit reports. I personally doubt that 50% +/- 5% on either side would make a huge difference, as 50% util is still pretty high. I dont think there is firm answer to your question.

[MBOhio2]

Thanks Robert - I understand that the algorithm and exact calculation method is a mystery, but I know we've all been able to garner insights from the personal experiences of many members, so I wanted to get thoughts on what I had previously heard regarding the 50% threshhold. I know that for me perosnally, there will be no guarantees, but I wanted to get everyone's "hunch" before I start throwing thousands of $ at a debt  that could better serve as reserves

[llecs]

OP, I don't know if I asked this already, but are all of your other CCs at $0? If not, I'd start there first. $0 balances are a big deal [ETA...on all but the HELOC].

[MBOhio2]

Yes, all of my CCs (I have 4 of them) have a $0 balance - the only balance I'm carrying on anything revolving is this LOC that has a 65% util on it's own, so it's making my overall pretty high

Like I said, I literally just realized yesterday that it was counting as revolving because until recently, I had been maxed out on everything with a 100% util so it was tough to see that the LOC was factored in (and a silly oversight on my part). It wasn't until the $0 balances starting reporting that I realized something wasn't making sense mathmatically and it hit me. So now I'm scrambling to see where I can get more points in my score because I thought paying off my CCs would take me to 0% util and provide a huge increase, which is obviously not the case now.

[chasmith]

Both total Utilization (total owed on all revolving debt divided by total of all revolving credit limits) and individual utilization on each account affect scoring.

That's why many recommend that you have less than 10% total utilization, and if you can, have only one account report a balance each month. 

I think that the total util under 9% is valid, along with having no individual account be over 9%.  I think you can have more than one balance reporting as long as less than half your open revolving accounts have balances.

It sounds like it may take some time to drop util on the LOC.  Nobody knows what the specific breakpoints are but 50%, 30% and 10% have seemed magic to me.

[MBOhio2]

Thanks everyone. It would take about $2100 toward the LOC to get overall to just below 49% so I think I should just do it and cross my fingers that it gives me the increase I need. Hopefully losing the $2100 in reserves won't prove detrimental - this is such a balancing act!!

[Anonymous]

We'll keep our fingers crossed for you as well!

Keep us updated!

[Anonymous]

I've talked with two lenders this week, and grilled them on FICO scores.  I was primarily interested in the models they used, and their historical observations as to how the scores they pulled compared with consumer obtained scores.

In both discussions, the lenders each volunteered that keeping credit card balances under 50% utilization helps a lot.  Yes, the lower the utilization, the better (obviously).  But, you'll get dinged more harshly for utilization above 50%.  They also said this ding tends to be more observable for consumers with otherwise blemish-free records.

In my experience the past month in paying down some balances, I went from a 733 FICO EQ to 785 by decreasing overall utilization to 12% (TU FICO score went from 732 to 750, not as good a response).  Of the nine revolving accounts open, one reports < 10% and two report just under 50% (I'm taking advantage of 0% interest promotions as the rest gets paid down).  The other trade lines are zero.  My history, otherwise, is blemish-free and fairly long.  So, it definitely helps getting things under 50%.  The FICO simulator, by the way, suggests that paying off the rest will get my score to about 825 (range 805 - 840); frankly, for my EQ scores, the simulator has been dead on if I take the average of the range.    For fun, I've been comparing to Credit Karma (yes, I know its a FAKO, but based on TU reports) to watch how that score trends compared to EQ scores here on Scorewatch.  It's skyrocketed, too, but not as high.  I think that is due to the number of open tradelines reporting a balance.

Now, if money just grew on trees and I had my original savings balance back . . .

Oh, and I wish like hell that I'd had some kind of financial education in high school.  It's criminal that kids (that I) didn't learn about this stuff until after damage (in my case, lots of wasted money on interest payments) had been done. 

[Booner72]

I finally got my utilization to 49% and saw a big score jump of 18 points, but at the same time I paid down a 400.00 maxed out card to 50, so I think it's the combination.

What bugs me though, is that "MYFICO" isn't updating any of this....I'm getting the info from freecreditscore.....I know my 18 points will probably be different here, but I know the utilization should be the same, which should increase the FICO score.

Also, thanks for the math instruction on how to get the % of utilization. Very helpful.