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12-01-2012 02:36 PM
This is something that seems pretty obvious to me, but I've never found an answer for.
Say person A has an average utilization of 90% over the past 5 years, but they just decreased it to zero by borrowing cash from a friend. Person B has always had a utilization of zero percent. Everything else is equal. The question is: who currently has a better FICO score?
12-01-2012 02:43 PM
With everything else being equal, there would be no difference between the two persons. Both have 0% util.
FICO is a snapshot in time and only scores based on what is on the report at that time. FICO won't know that you (or I) have or had 100% util at one point, or if I had a dozen or so CAs reporting if they are no longer there. It lives in the moment.
12-02-2012 06:43 PM
I've seen reports of scores dropping when no credit is being used (balances all at zero) and the drop increases month after month.
It wouldn't surprise me if they don't also look at historical balances in some way as well. Particularly if they are trending but this is one of the dark corners of FICO scoring that there is little information about.
12-05-2012 02:18 PM
Utilization is a memory-less property
Util is a memory less property. Unfortunately, paying off all you cards in advance to CRA reporting so they report zero balance isn't memoryless or the following reason for FICO score drops wouldn't be given:
There are no recent balances on your revolving credit accounts.
Who knows what other aspects of historical balances or trends impact FICO scores. FICO sure doesn't say. FICO would be remiss if they didn't use the info. There is a difference between someone trending upward in UTIL v trending downward even if both are currently at 50%