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Let's say you have four cards, each with a credit limit of $2,000. Two, A and B, have credit limits reported whose utilization is calculated, and two, C and D, don't and are ignored. The monthly balance for A is usually $10, while the rest are at $0.
Then one month you go wild and purchase lots of Martha Stewart pillowcases and Marie Osmond dolls. You are short $490 meeting your $10 from paying down balances before statement cuts. How do you distribute the overall balance of $500?
You could leave $500 on card A usually at $10, with a 25% util on that card. Or 12.5% on both A and B. Or apply the $490 to C or C and D knowing they aren't used for util. Not sure how that would otherwise impact you.
Good question! This a pretty intricate fine-tuning, but if fine-tuning is your goal, then one option clearly stands out.
As a preface, a brief summary on how overall util is scored on revolving util. The predominant factor is overall % util. Also factored in, but to a lower degree, is the % util on each indiv card, and then the % of all cards reporting more than a zero balance. The problem in giving a clear answer to your question is that Fair Isaac has never published the relative degrees of weighting given, within this category, ot overall % util, indiv card % utils, and cards with balances. So a lot of guesswork when getting down to this level of FICO tweaking.
Option 1. Putting it all on card A. Thus, 25% util on card A,and 0% util and $0 bal on card B
Option 2. Putting half into card A, and half into card B Thus, 25% util on both cards A and B, and a balance reported on cards A and B.
Option 3. Putting it into cards C and/ir D Thus, both 0% util and $0 balance on both cards A and B.
From a pure FICO impact, I would say option 3 is superior.
Under options 1 and 2, the overall % util is the same. 12.5%. So, in choosing between options 1 and 2, it is weighting of the higher util on indiv card A against having a lower percent of cards showing $0 balance. That is probably a wash.
Option 3 has 0% overall util, and both 0% indiv card util and a $0 balance on the reporting cards.
HOWEVR, I must say that I have made an assumption in this analysis that I am NOT certain is the case. I am presuming that since cards C and D dont enter into revolving % util, and you have said that they are not, then does this necessarity mean that they also dont count into determining the number/% of cards reporting a $0 balance? I dont think this is a major factor in util scoring, but I cant say for sure that cards C and D are not counted as cards with balances. That is a pretting high level of FICO tweaking!
@RobertEG wrote:I cant say for sure that cards C and D are not counted as cards with balances.
Thanks and good point. I was afraid of something in that direction. I have this horrible memory from some time back when all I could find to contribute to a 25 point drop was a change in the amounts of cards not used for util. Like card C and D. C had a balance of something like $1,500 and D maybe $900. The next month C and D had around $10 and D $1,800 respectively. A 25 point drop! If anything, I would have expected a score increase because the overall balance was lower.
Card D was my Citi World, one of those nasty cards that report neither the credit limit nor the high balance. Of course only TU 98 cares about the high balance anyway, and the score drop was in EQ. I had this theory that EQ somehow knew the card had passed 50% of its high balance. But CRAs don't keep a record of monthly balances and calculate the high balances themselves, do they?
Another funny thing along these lines that happened to me months later was for a card that reports its credit limit. The monthly balance was $10, and yet the overall util was listed as 0%. The util should always be rounded up. I dismissed that as information that had been updated in the credit report in one place and not in another place of the same report. But it could explain the above.