FICO impact of all CCs reporting

[Anonymous]

In the last few months on the Forum, there’s been quite a deal of interest in this question:

Suppose a person starts with all of his credit cards reporting at $0, except one, which reports a small positive balance.  That’s in theory ideal.  Then he allows all of his credit cards to show a positive balance, while keeping total CC utilization very low.  What FICO impact  is there?

I did that last month.  My scores dropped 7 to 10 points, depending on the CRA.  It wasn’t perfectly scientific, since my total utilization went from 1% to 2%.  But if we assume the change in U had little or no impact, then the entire drop was due to the number of accounts showing a balance.

I have four open credit cards.  Exactly one showed a balance at start and exactly 4 showed a balance at end.  Absolutely no other new events occurred: e.g. no new inquiries or new accounts, no old inquiries falling off, no accounts being closed, etc. 

The shift was basically 836 to 826 at TU and 836 to 829 at EQ.  EX had not updated the data yet.

[tufa4311]

Well I guess you know what the next test will be the next reporting month...

[Thomas_Thumb]

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@Anonymous wrote:

In the last few months on the Forum, there’s been quite a deal of interest in this question:

Suppose a person starts with all of his credit cards reporting at $0, except one, which reports a small positive balance.  That’s in theory ideal.  Then he allows all of his credit cards to show a positive balance, while keeping total CC utilization very low.  What FICO impact  is there?

I did that last month.  My scores dropped 7 to 10 points, depending on the CRA.  It wasn’t perfectly scientific, since my total utilization went from 1% to 2%.  But if we assume the change in U had little or no impact, then the entire drop was due to the number of accounts showing a balance.

I have four open credit cards.  Exactly one showed a balance at start and exactly 4 showed a balance at end.  Absolutely no other new events occurred: e.g. no new inquiries or new accounts, no old inquiries falling off, no accounts being closed, etc. 

The shift was basically 836 to 826 at TU and 836 to 829 at EQ.  EX had not updated the data yet.

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Thanks for the info. If possible, please test 3 of 4 reporting at same utilization as 4 of 4.

A few weeks ago a poster named "iV" mentioned a 6 point drop going from 4 of 5 cards reporting (850) to 5 of 5 (844) and then a 6 point rise going back to 4 of 5 reporting (850) at "constant" utilization.

[Anonymous]

Hey Thom Thumb!  Wish I could help further.  I canceled my credit monitoring service on Day 28.  It's just not worth it to me personally to pay $300 a year for it.  I joined briefly to get a few dozen different FICO scores.  Just before I cancelled I grabbed the changed FICO 8 scores and thought I'd report back what I saw. 

You mention the number of open credit cards you have, and then the number of these that reported a positive balance.  I described it the same way. of course.  It is possible, however, that FICO may be considering a different "denominator" involved than "total number of open credit cards."  The language FICO uses on its page describing the various sub-factors from the "Amounts Owed" category is simply "How many accounts have balances".

http://www.myfico.com/CreditEducation/Amounts-Owed.aspx

Note that all they say is "accounts."  Not revolving accounts, and not open accounts.  Just "accounts."  Therefore it's possible that if a profile has a large number of closed accounts in good standing, these are counted toward your total number of accounts with zero balances.  Also possible that, if you have (say) three open installment loans, these are counted towards your total number of accounts with a balance.

Thus it's possible that, in my case, I didn't even get close to 50% of my accounts showing a balance, even when all my credit cards were showing one, since I have lots of closed installment loans with a zero balance (and only one installment loan with a balance).  Or if somebody has three student loans and a car loan and a mortgage and four credit cards (all open) and no closed accounts, then even with three of his four cards at $0, he's still got 2/3 of his accounts showing balances.

Just worth throwing out there that we don't know for sure what the denominator is... assuming deneominators matter at all.  Have fun in FICO land!

[Revelate]

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@Anonymous wrote:

Hey Thom Thumb!  Wish I could help further.  I canceled my credit monitoring service on Day 28.  It's just not worth it to me personally to pay $300 a year for it.  I joined briefly to get a few dozen different FICO scores.  Just before I cancelled I grabbed the changed FICO 8 scores and thought I'd report back what I saw. 

You mention the number of open credit cards you have, and then the number of these that reported a positive balance.  I described it the same way. of course.  It is possible, however, that FICO may be considering a different "denominator" involved than "total number of open credit cards."  The language FICO uses on its page describing the various sub-factors from the "Amounts Owed" category is simply "How many accounts have balances".

http://www.myfico.com/CreditEducation/Amounts-Owed.aspx

Note that all they say is "accounts."  Not revolving accounts, and not open accounts.  Just "accounts."  Therefore it's possible that if a profile has a large number of closed accounts in good standing, these are counted toward your total number of accounts with zero balances.  Also possible that, if you have (say) three open installment loans, these are counted towards your total number of accounts with a balance.

Thus it's possible that, in my case, I didn't even get close to 50% of my accounts showing a balance, even when all my credit cards were showing one, since I have lots of closed installment loans with a zero balance (and only one installment loan with a balance).  Or if somebody has three student loans and a car loan and a mortgage and four credit cards (all open) and no closed accounts, then even with three of his four cards at $0, he's still got 2/3 of his accounts showing balances.

Just worth throwing out there that we don't know for sure what the denominator is... assuming deneominators matter at all.  Have fun in FICO land!

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Installment line balances have nothing to do with revolving utilization metrics.  The verbiage on FICO Consumer is purposely vague in my opinion.

We saw this test earlier when lg8203 (I never can remember her number) did the same with 8 cards at $1 each, and she dropped way more than that.  

[CreditDunce]

This is an excellent datapoint for someone with excellent credit.

For others who may read this thread, I would caution that your credit score may behave differently.   For example, someone with derog's on their credit report might see a much larger drop for the number of cards reporting a balance or high utilization than someone with excellent credit.

[NRB525]

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@Anonymous wrote:

In the last few months on the Forum, there’s been quite a deal of interest in this question:

Suppose a person starts with all of his credit cards reporting at $0, except one, which reports a small positive balance.  That’s in theory ideal.  Then he allows all of his credit cards to show a positive balance, while keeping total CC utilization very low.  What FICO impact  is there?

I did that last month.  My scores dropped 7 to 10 points, depending on the CRA.  It wasn’t perfectly scientific, since my total utilization went from 1% to 2%.  But if we assume the change in U had little or no impact, then the entire drop was due to the number of accounts showing a balance.

I have four open credit cards.  Exactly one showed a balance at start and exactly 4 showed a balance at end.  Absolutely no other new events occurred: e.g. no new inquiries or new accounts, no old inquiries falling off, no accounts being closed, etc. 

The shift was basically 836 to 826 at TU and 836 to 829 at EQ.  EX had not updated the data yet.

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That's a good start, and it's generally understood there is an impact to more cards reporting.

The next phase is, what happens if all 4 cards are allowed to continue reporting balances for several months? Does the score climb back as it gets familiar again with 4 cards reporting?

Shocking the score to make a change isn't difficult. Sticking with that new profile to allow the score to stabilize (if indeed it does stabilize and make up the lost ground) takes longer.

[Anonymous]

I am also interested to see how the score react if the number of reporting cards stablized for months. I would guess the score will raise back and continue to climb but with a slower rate if all the other parameters (like util) are good. Anyone tried that before?

[Thomas_Thumb]

Not sure that this answers your question specifically but here goes:

1) I have maintained aggregate utilization in the 1% to 3% range month to month over the last 1.5 years (a couple excursions up to 5%)

2) I have 6 open cards. Every card shows a non zero balance at least once every 6 months with most reporting a balance every 3 months or less.

3) During the 1.5 year time frame # cards reporting have been 2 of 6, 3 of 6, 4 of 6 and 5 of 6..

Fico 8 classic score has remained at 850 during the 1.5 year timeframe. So, although there is no information here to tell you how many cards reporting is optimal, it does indicate reporting balances on multiple cards will not inhibit ability to build score. It also indicates no inherant penalty associated with reporting a balance on multiple cards.

I do suspect, frequency of card use (reporting non zero balances) impacts what % of open cards can report a balance in a given month before a score drop.

[Anonymous]

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@Thomas_Thumb wrote:

Fico 8 classic score has remained at 850 during the 1.5 year timeframe. So, although there is no information here to tell you how many cards reporting is optimal, it does indicate reporting balances on multiple cards will not inhibit ability to build score. It also indicates no inherant penalty associated with reporting a balance on multiple cards.

I do suspect, frequency of card use (reporting non zero balances) impacts what % of open cards can report a balance in a given month before a score drop.

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For those with a dirty report, the results may not be the same.

I posted in another utilization thread about this topic previously, but the short of it is...

I have tax liens reporting and no other derogatories or lates ever.

I only have 3 cards.

I take a hit when 2 of 3 cards report (6-8 points), I take a bigger hit when 3 of 3 cards report. 

I get the points back when I go back to two then one reporting.

The most sensitive score to this seems to be EQ 08, the least sensitive seems to be TU 08.

What does this mean?

It means I can put lipstick on the pig if I want to apply for credit and get 6-16 points higher when my report is optimized.

I can get 720s-730s FICO 08s with all cards reporting a balance and utilization under 9%

I can get 740 across the board FICO 08s with a single card reporting