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How many CCs can report small balance without Fico degradation?

Regular Contributor

How many CCs can report small balance without Fico degradation?

The AZEO method says that to maximize the Fico8 score, it is recommended to keep a small balance on one CC and no balance on 2+ CC cards.

Is there any estimation on Fico8 score change in case of keeping a small balance (<1% of each CL) on 2 or 3 CCs instead of 1 CC? Let's assume that the total number of CCs is 10.

Current:::::::::::::EX8=740, EQ8=740, TU8=760.
12 month goal: EX8=800, EQ8=800, TU8=800.
AMEX BCE, AMEX PRG, AMEX HH, BOA CR, BOA Better CR, BOA PR, BOA TR, Chase AMZ, Chase Freedom, Discover CR, Uber, Walmart/Synchrony.
Message 1 of 24
23 REPLIES
Valued Contributor

Re: How many CCs can report small balance without Fico degradation?

xenon3030 wrote:

The AZEO method says that to maximize the Fico8 score, it is recommended to keep a small balance on one CC and no balance on 2+ CC cards.

Is there any estimation on Fico8 score change in case of keeping a small balance (<1% of each CL) on 2 or 3 CCs instead of 1 CC? Let's assume that the total number of CCs is 10.

Yes, your Fico 8 score is unlikely to be negatively affected by reporting "small" balances on 3 cards instead of 1 card if you have 7 or more open CCs and your file is sufficiently aged.

The key criteria for a "small balance" on a card is anything under 29% of the card's CL so long as aggregate utilization across all cards remains under 9%. Tiny balance reporting is not critical.

As an example, let's assume someone has 5 cards with a total CL of \$50k. Say the cards have CLs of \$2k, \$3k, \$10k, \$10k and \$25k. If only 1 card reports a balance balance reported the card being used can likely report:

1) \$5, \$50 or \$500 on the \$2k card without a score penalty.

2) \$10, \$100 or \$1000 or even \$2500 on a \$10k card without a score penalty

3) on the \$25k card reported balance would be limited by aggregate UT%. Using 8% of aggregate as a ceiling => \$4k maximum on the card although reporting \$6k would be under 25% of the card's limit without negative consequences.

Ultimately, utilization has no history with current scoring models, so test your profile to determine how it reacts - and report back. No need to guestimate how Fico will treat your profile based on data from others. I tested my own file and saw the following for # cards reporting "small" balances based on the older Classic Fico models "mortgage Fico models".

Equifax is more sensitive to # cards reporting (internal tweak I suspect) than TU/EX. I also see greater sensitivity for # cards reporting with EQ on Fico 8 bankcard relative to EX/TU. As expected, not much difference among the three CRAs on Fico 9 Bankcard - Fico reigned in CRA tweaking on Fico 9.

Fico 8: .......EQ 850 TU 850 EX 850 (3/2017)
Fico 9: .......EQ 850 TU 850 EX 850 (3/2017)
Fico 4 .....:. EQ 804 TU 823 EX 830 (3/2017) EX Fico 98: 839 (3/2017)
VS 3.0:...... EQ 832 TU 832 EX 832 (3/2017)
Fico 8 BC:. EQ 887 TU 899 EX 900 (3/2017)
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950 (4/2017)
Message 2 of 24
Senior Contributor

Re: How many CCs can report small balance without Fico degradation?

Hey Xenon.  The subject of your post was specifically how FICO 8 works,  Bear in mind, however, that the mortgage models (FICO 04 and FICO 98) appear to be more sensistive than FICO 8 to number of open accounts with a positive balance.  When preparing for a mortgage, therefore, if is simpler just to do a straight AZEO.  That's just an FYI in case you ever plan to do that.

I received a reason statement from the FICO mortgage models that my score was being hurt by too many accounts showing a balance, and this is with four nonzero accounts (2 cards and 2 loans) out of a total of 14 open accounts (12 cards and 2 loans).  My guess is that I would have done better with three accounts (one card and two loans) and best of all with two (one card and one loan).

In terms of percentages alone, I was doing fine: 29% of my total accounts were showing a balance and 17% of my revolving accounts.  It was the raw integer number of accounts itself that apparently gave me a ding.

Message 3 of 24
Super Contributor

Re: How many CCs can report small balance without Fico degradation?

CreditGuyInDixie wrote:

Hey Xenon.  The subject of your post was specifically how FICO 8 works,  Bear in mind, however, that the mortgage models (FICO 04 and FICO 98) appear to be more sensistive than FICO 8 to number of open accounts with a positive balance.  When preparing for a mortgage, therefore, if is simpler just to do a straight AZEO.  That's just an FYI in case you ever plan to do that.

I received a reason statement from the FICO mortgage models that my score was being hurt by too many accounts showing a balance, and this is with four nonzero accounts (2 cards and 2 loans) out of a total of 14 open accounts (12 cards and 2 loans).  My guess is that I would have done better with three accounts (one card and two loans) and best of all with two (one card and one loan).

In terms of percentages alone, I was doing fine: 29% of my total accounts were showing a balance and 17% of my revolving accounts.  It was the raw integer number of accounts itself that apparently gave me a ding.

And for that mortgage app, do you know what the potential difference in mortgage interest rate would be, presuming that application went to funding?

High Bal Jan 2009 \$116k on \$146k limits 80% Util.
Oct 2014 \$46k on \$127k 36% util EQ 722 TU 727 EX 727 FICO Simulator 2014: \$20k balances = 812 FICO.
March 2017 \$20k on \$300k 6% util EQ 824 TU 824 EX 815

5 / 24 counting down to 1 Nov 2017... wait I guess it's 18 Dec 2017 to get 4/24
Message 4 of 24
Senior Contributor

Re: How many CCs can report small balance without Fico degradation?

NRB525 wrote:

CreditGuyInDixie wrote:

Hey Xenon.  The subject of your post was specifically how FICO 8 works,  Bear in mind, however, that the mortgage models (FICO 04 and FICO 98) appear to be more sensistive than FICO 8 to number of open accounts with a positive balance.  When preparing for a mortgage, therefore, if is simpler just to do a straight AZEO.  That's just an FYI in case you ever plan to do that.

I received a reason statement from the FICO mortgage models that my score was being hurt by too many accounts showing a balance, and this is with four nonzero accounts (2 cards and 2 loans) out of a total of 14 open accounts (12 cards and 2 loans).  My guess is that I would have done better with three accounts (one card and two loans) and best of all with two (one card and one loan).

In terms of percentages alone, I was doing fine: 29% of my total accounts were showing a balance and 17% of my revolving accounts.  It was the raw integer number of accounts itself that apparently gave me a ding.

And for that mortgage app, do you know what the potential difference in mortgage interest rate would be, presuming that application went to funding?

I didn't apply for a loan.  I just pulled my mortgage scores at myFICO.  In my particular case it wouldn't have made a difference in mortgage rate, since my scores were reasonably high.  I was just giving that as theoretical information about how the scoring model works.  It does have practical ramifications for people who might be borderline of course (whether for the mortgage itself or PMI).

Message 5 of 24
Regular Contributor

Re: How many CCs can report small balance without Fico degradation?

I have a 11% balance loan. Here are some EX credit reports: After installing a 9% balance SSL loan , Fico8 did not change (also EX-Auto Fico8). But EX-Mortgate Fico2 dropped by 9 points. Also, EX-Auto Fico2 dropped by 8 points. I do not have a product to monitor Fico9.

Therefore, the number of loan accounts reporting a balance would be imporant for other Fico models but not Fico8. I see how they work on CCs with balance and also two loans with both <9% balance.

Is there a free way to monitor Fico9?

Current:::::::::::::EX8=740, EQ8=740, TU8=760.
12 month goal: EX8=800, EQ8=800, TU8=800.
AMEX BCE, AMEX PRG, AMEX HH, BOA CR, BOA Better CR, BOA PR, BOA TR, Chase AMZ, Chase Freedom, Discover CR, Uber, Walmart/Synchrony.
Message 6 of 24
Senior Contributor

Re: How many CCs can report small balance without Fico degradation?

Whenever this subject comes up, I always feel the need to chime in that while there are some generally accepted "rules" 50%+ of your cards reporting a balance will adversely impact score, it isn't always the case on all profiles.  Over a year ago when I had 4-5 cards I saw no score drop in going from AZEO to over 50% of my cards reporting balances and then to 100% of my cards reporting balances.  At the time I was dirty on all 3B.  Today, I'm clean on 2B and only dirty on 1B, so I'd like to test this out again to see if I see any differences.  Now though I sit at 8 CCs, although I don't think the actual number should really be a variable that matters in this discussion.

Message 7 of 24
Moderator

Re: How many CCs can report small balance without Fico degradation?

BrutalBodyShots wrote:

Whenever this subject comes up, I always feel the need to chime in that while there are some generally accepted "rules" 50%+ of your cards reporting a balance will adversely impact score, it isn't always the case on all profiles.  Over a year ago when I had 4-5 cards I saw no score drop in going from AZEO to over 50% of my cards reporting balances and then to 100% of my cards reporting balances.  At the time I was dirty on all 3B.  Today, I'm clean on 2B and only dirty on 1B, so I'd like to test this out again to see if I see any differences.  Now though I sit at 8 CCs, although I don't think the actual number should really be a variable that matters in this discussion.

All my data suggests it's just a percentage of cards.

I haven't checked since my tax lien came off but with a tax lien and lates:

1/3 of revolvers on EQ FICO 8 = ding

1/2 of revolvers on EX / TU and EQ (again) FICO 8 = ding

Total damage was 7-8 points across the bureaus; this was with trivial aggregate utilization.  That said 7 points on a mortgage score (if it was the same, was 693 -> 686 for me EQ FICO 5) can move you over a tier boundary, so I highly recommend getting as clean as possible and for everyone that's one small balance on a single credit card and every other revolver zero if you can.

That works for everyone, if you can get by (like I can now with the number of cards I have) with more than 1, awesome.

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)

Take the myFICO Fitness Challenge
Message 8 of 24
Senior Contributor

Re: How many CCs can report small balance without Fico degradation?

Right.  I should have pointed out that AZEO will always maximize things for everyone.  There's no scenario where allowing more cards to report balances (outside of an AZEO AU exception) will actually help your score.  It's just worth noting that on some profiles people have reported being able to report small balances on more than 50% of their cards all the way up to 100% and experience no ding [over AZEO].

Message 9 of 24
Regular Contributor

Re: How many CCs can report small balance without Fico degradation?

BrutalBodyShots wrote:

... It's just worth noting that on some profiles people have reported being able to report small balances on more than 50% of their cards all the way up to 100% and experience no ding [over AZEO].

I have 3/3 revolvers reporting small % balances and two FICO8 scores have continued to go up each month (EQ saw a small ding when the third posted, but at 2 saw a larger increase).  Perhaps I'd see a bigger increase with AZEO, but it doesn't appear to be such a severe penalty that it would trump everything else.  I'll find out with the next cycle when I'm back to AZEO.

I just wanted all the accounts to show a little activity.

Message 10 of 24