Charge cards and utilization

Anonymous · ‎07-04-2011

Hey Guys,

How do charge cards play into utilization?

If I have $10K of a $10K CL available on a Citi card for example (0% util), and an AmEx Green Card with a balance of $5,000 which is a PIF, where does this put my utilization?

Does it benefit one's credit score at all to pay off a charge card before the statement prints?

(I've looked around a bit and can't find an answer, forgive me if this is redundant!)

Anonymous · ‎07-04-2011

The answer is that charge cards do not impact utilization.

Here's a link to the article I read in case anyone is interested; http://www.creditcards.com/credit-card-news/jeremy-simon-credit-score-charge-card-amex-1508.php

RobertEG · ‎07-05-2011

Revolving credit plays a major role in FICO assessment of utilization of credit.

Charge cards, if the meaning refers to cards with no predefined CL, have different ways of factoring in. FICO will sometimes use the highest balance previously held as a subsitutue for CL in its util calculation. I have not seen a thorough report on how and when specific non-CL cards are scored, but they often are

FICO considers your use of discretionary (revolving) credit to be, amongst all forms or utilization, the most highly predictive of risk of chance of future delinquency, and that is what FICO is all about. An analysis of risk of future delinquency.

The best way to assess each account is to go over the % util figures provided in your CR, and back-calculate to which were included, and how.

Anonymous · ‎07-05-2011

@RobertEG wrote:
Revolving credit plays a major role in FICO assessment of utilization of credit.
Charge cards, if the meaning refers to cards with no predefined CL, have different ways of factoring in. FICO will sometimes use the highest balance previously held as a subsitutue for CL in its util calculation. I have not seen a thorough report on how and when specific non-CL cards are scored, but they often are
FICO considers your use of discretionary (revolving) credit to be, amongst all forms or utilization, the most highly predictive of risk of chance of future delinquency, and that is what FICO is all about. An analysis of risk of future delinquency.
The best way to assess each account is to go over the % util figures provided in your CR, and back-calculate to which were included, and how.

That's great info, thank you!

As for the sentence in red above, the FICO spokesman quoted in the article (link in second post of thread) says that they've stopped using the highest balance as a substitute CL.

kal9988 · ‎07-06-2011

This is only for charge cards that must be paid off in full each month, not credit cards which have balances that carry over. For those, the highest balance seems to be used as the credit limit in scoring.