Reply
Regular Contributor
okrogius
Posts: 169
Registered: ‎03-16-2007
0

Different take on utilization

So one of my cards updated tonight - went from 4.783% (574/12000) utilization to 3.195% (639/20000). Equifax score dropped four points.
 
Now just have to figure out if I think this is because of being in a different pool (more cards with higher limits?), or something else.
Moderator Emeritus
Brammy
Posts: 5,436
Registered: ‎03-10-2007
0

Re: Different take on utilization



okrogius wrote:
So one of my cards updated tonight - went from 4.783% (574/12000) utilization to 3.195% (639/20000). Equifax score dropped four points.
 
Now just have to figure out if I think this is because of being in a different pool (more cards with higher limits?), or something else.


 
That may not be the utilization factor but the too much avail credit factor.  Its a fine line

Contributor
antredd67
Posts: 83
Registered: ‎03-22-2007
0

Re: Different take on utilization

[ Edited ]
See that's messed because on one hand they tell us not to close any accounts..but that's the main reason that i am closing ACCOUNTS THAT I DONT NEED..because i dont want to have too much available credit with
 
BofA line of credit being 22,400
BofA MC 16,500
Wamu  visa 12,000
Capital one  MC 7700
Wells Fargo MC  7500
Discover 6000
Direct Merchants MC 4500
Chevron  2000
Citibank  2000  
 
Now most of these cards are below 50% uti but not down to 10% uti as Brammy has brilliantly suggested that we should have all of our accounts.  Now imagine me suddenly paying off all of my accounts to 0 balance, i fear that i would drop even worse than 4 points..try 17-30 just because after paying down those accounts i now have all of this available credit to use or charge up.
 
Also my closing my newest AMEX with 5000 limit could be reason there wasn't a change in my Fico score...i am pretty much peeked out with available credit..so now i think i have to really look at the cards that are newer that I dont really need eventhough I have such high limits on them. What you think Brammy?


Message Edited by antredd67 on 04-16-2007 08:13 PM
Moderator Emeritus
Brammy
Posts: 5,436
Registered: ‎03-10-2007
0

Re: Different take on utilization

[ Edited ]


antredd67 wrote:
See that's messed because on one hand they tell us not to close any accounts..but that's the main reason that i am closing ACCOUNTS THAT I DONT NEED..because i dont want to have too much available credit with
 
BofA line of credit being 22,400
BofA MC 16,500
Wamu  visa 12,000
Capital one  MC 7700
Wells Fargo MC  7500
Discover 6000
Direct Merchants MC 4500
Chevron  2000
Citibank  2000  
 
Now most of these cards are below 50% uti but not down to 10% uti as Brammy has brilliantly suggested that we should have all of our accounts.  Now imagine me suddenly paying off all of my accounts to 0 balance, i fear that i would drop even worse than 4 points..try 17-30 just because after paying down those accounts i now have all of this available credit to use or charge up.
 
Also my closing my newest AMEX with 5000 limit could be reason there wasn't a change in my Fico score...i am pretty much peeked out with available credit..so now i think i have to really look at the cards that are newer that I dont really need eventhough I have such high limits on them. What you think Brammy?


Message Edited by antredd67 on 04-16-2007 08:13 PM

 
What I think is this, you could leave them all open and then they will eventually fall ooffyour account until you use them and cause activity to report.
 
Personally I say never close an account but there are exceptions to all rules.  I say that hinking most people would only have the amount of credit they need.  If I were going to close I would base my closing on age and whther or not I would actually ever use the card. 
 
The thing about closing cards, thats fine as long as yu aren't going to close them just to open new ones. Close newest and least used but never the oldest cards.  I would faint with that much credit.  I have about 14K total and balances only only two of those.  I have two store cards open that I hope to get business accounts with these store next yea so I keep them around I have 6 other cards two with fairly good balances though nothng over 50% the others at 0.  Why because the cards I'm currently using are either giving me some sort of reward or 0% interest.  Why keep the others open?  In case one of the two get a senior moment and decide to ratejack me I have enough avail credit to BT at a moment's notice.
 
I fell this way,, if you can justify all of that credit by all means keep it.  Otherwise get back into a avail range which you could reasonably see making use of though you may never have to.  And it yu close start with the newest one that gives the least benefit.
 
BTW even Bramy is considring giving Juniper the old heave ho it does nothing but take up space with a rate a full 2% higher than my second highest card.  I'll let it sit at 0 til the anniversary (WAMU will be 0 by then 3 mos from now) and then D6^ it if something doesn't change.  Going from s/p has made me greedy now that I know whats out there.



Message Edited by Brammy on 04-16-2007 11:40 PM

Message Edited by Brammy on 04-16-2007 11:41 PM
Valued Contributor
TheNewWorldMan
Posts: 2,374
Registered: ‎03-15-2007
0

Re: Different take on utilization



okrogius wrote:
So one of my cards updated tonight - went from 4.783% (574/12000) utilization to 3.195% (639/20000). Equifax score dropped four points.
 
Now just have to figure out if I think this is because of being in a different pool (more cards with higher limits?), or something else.



I doubt a 1.5% change in utilization is going to have a significant effect in any event.
 
I've always suspected that you reach an asymptote sooner or later with available credit.  Going from $500 to $2000 makes for a healthy FICO gain.  $2000 to $5000?  You'll get a decent increase.  $5000 to $10000?  Maybe a small bump.  But once you hit a certain level, I think the effect drops off to nil.  You've gotten all the mileage you're going to get out of big credit lines, and there's nothing more to gain that way.
 
Ditto for reducing utilization...going from 100% down to 50% will give you a big jump.  50% to 20%, some increase.  Once you get below 10% or so, the same principle applies: you've pushed that lever as far as it will go.  So going from 8% to 5% isn't going to get you anywhere--the whole point of factoring utilization is that FICO doesn't like you to be at or near maximum.  By the time you drop below 10-20%, FICO gets the point: you're not about to max out.
- - - -
in a credit-scoring postnuclear Stone Age...
Regular Contributor
okrogius
Posts: 169
Registered: ‎03-16-2007
0

Re: Different take on utilization

"
I doubt a 1.5% change in utilization is going to have a significant effect in any event.
 
I've always suspected that you reach an asymptote sooner or later with available credit.  Going from $500 to $2000 makes for a healthy FICO gain.  $2000 to $5000?  You'll get a decent increase.  $5000 to $10000?  Maybe a small bump.  But once you hit a certain level, I think the effect drops off to nil.  You've gotten all the mileage you're going to get out of big credit lines, and there's nothing more to gain that way.
 
Ditto for reducing utilization...going from 100% down to 50% will give you a big jump.  50% to 20%, some increase.  Once you get below 10% or so, the same principle applies: you've pushed that lever as far as it will go.  So going from 8% to 5% isn't going to get you anywhere--the whole point of factoring utilization is that FICO doesn't like you to be at or near maximum.  By the time you drop below 10-20%, FICO gets the point: you're not about to max out."
 
 
Obviously the gains become less worthwhile. My only fun note in this was that actually reducing utilization caused (albeit a very small) decrease score-wise.

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+