Credit Ratios

[SSeawright]

I am seeking to improve my credit rating. I am focusing on utilization ratios.  I add up all the revolving credit balances on my most recent report. I then add up all the credit limits on the same report. To my way of thinking utilization ratio should be balance divided by limit.  I come up with 12.9%. The credit report shows 26% for each credit bureau.

Why is their figure twice my calculation? Are some of the entries on the credit report not considered ( those over a certain age of non-use) or are there other factors that are not obvious? 

[vanillabean]

Could be that FICO is not factoring in authorized user accounts. Or that you have one of those infamous ~40K cards!

[SSeawright]

What are 40K accounts?

[pizzadude]

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@SSeawright wrote:

What are 40K accounts?

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A revolving account with a huge credit limit, like $40,000 ~ FICO revolving utilization doesn't include them

[CreditDunce]

Closed and Inactive accounts are not factored into your utilization.   By inactive I mean accounts that are not being reported by the CCC.

The best way to determine which accounts are not being factored in for you is to break out the calculator.  The math is not that difficult.

If you need your score to improve quickly, one of the best ways is to have one account report 1-9% utilization.  All of the other accounts should report 0.  Any CC that is maxed out will hurt your credit score even if your overall utilization is under control.

[pizzadude]

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@CreditDunce wrote:

Closed and Inactive accounts are not factored into your utilization.   By inactive I mean accounts that are not being reported by the CCC.

The best way to determine which accounts are not being factored in for you is to break out the calculator.  The math is not that difficult.

If you need your score to improve quickly, one of the best ways is to have one account report 1-9% utilization.  All of the other accounts should report 0.  Any CC that is maxed out will hurt your credit score even if your overall utilization is under control.

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Closed accounts will be included if they have both a credit limit and a balance.  

[CreditDunce]

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@pizzadude wrote:

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@CreditDunce wrote:

Closed and Inactive accounts are not factored into your utilization.   By inactive I mean accounts that are not being reported by the CCC.

The best way to determine which accounts are not being factored in for you is to break out the calculator.  The math is not that difficult.

If you need your score to improve quickly, one of the best ways is to have one account report 1-9% utilization.  All of the other accounts should report 0.  Any CC that is maxed out will hurt your credit score even if your overall utilization is under control.

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Closed accounts will be included if they have both a credit limit and a balance.  

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I stand corrected.  If there is a balance it will always be included. 

I also wanted to mention that AU accounts may or may not be included. 

[SSeawright]

What is the lower limit of High Credit Limit? I have a card with a $38,000 limit but no balance. I assume this would be excluded. I also have a card with a $24,000 limit and a $4,000 balance. Would this card be excluded from the limit calculation? What about the $4,000  balance? Would that be excluded from the balance calculation?

[bdhu2001]

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@SSeawright wrote:

What is the lower limit of High Credit Limit? I have a card with a $38,000 limit but no balance. I assume this would be excluded. I also have a card with a $24,000 limit and a $4,000 balance. Would this card be excluded from the limit calculation? What about the $4,000  balance? Would that be excluded from the balance calculation?

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I don't know, but my $24,500 cards are counted.

[fused]

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@SSeawright wrote:

What is the lower limit of High Credit Limit? I have a card with a $38,000 limit but no balance. I assume this would be excluded. I also have a card with a $24,000 limit and a $4,000 balance. Would this card be excluded from the limit calculation? What about the $4,000  balance? Would that be excluded from the balance calculation?

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We aren't certain where the cutoff is with CC's not factoring in FICO 08 utilization calculations. We also don't know if the cutoff is the same for all three scores. With the earlier FICO formulas, TU had the lowest cutoff, somewhere around 30-35K. EX was higher, tho. Your 24K CC and it's balance is factoring in util calculations. Not sure about your 38K CC, tho. At some point this will become clearer as it did with the the older FICO formulas.