I just had a devilish thought.
I have been casting about looking for reasons why, in these dark days, where my revolving utilization has been creeping up
from its usual 0 to 1% numbers to 5%, my FICO 8 scores seem to be strengthening instead of weakening.
And then I came upon this statement on Credit Karma Sesame:
"Creditors and lenders like to see between 5-7% used, as it shows you are responsible."
Can it be that getting utilization up to 5% is a good thing?
@SouthJamaica wrote:I just had a devilish thought.
I have been casting about looking for reasons why, in these dark days, where my revolving utilization has been creeping up
from its usual 0 to 1% numbers to 5%, my FICO 8 scores seem to be strengthening instead of weakening.
And then I came upon this statement on Credit Karma:
"Creditors and lenders like to see between 5-7% used, as it shows you are responsible."
Can it be that getting utilization up to 5% is a good thing?
SJ -
I have seen this with my VS3 scores and reported on it last year. For me somewhere between 4% and 5% aggregate utilization was optimal. I also ran a series of simulations using the one on CK and presented results in a graph. Graph pasted below.
P.S. For my thin but aged profile my actual VS3 scores top out at 835 - same top score with all three CRAs. EQ used to lag by 2 or 3 points but, I had one INQ on it and 0 on the other CRAs. Yes - EQ did NOT reach parity with TU and EX until the lone INQ aged TWO years. VS3 does count INQs for a full 2 years.
@Thomas_Thumb wrote:SJ -
I have seen this with my VS3 scores and reported on it last year. For me somewhere between 3.5% and 5% aggregate utilization was optimal. I also ran a series of simulations using the one on CK and presented results in a graph. Graph pasted below.
P.S. For my thin but aged profile my actual VS3 scores top out at 835 - same top score with all three CRAs. EQ used to lag by 2 or 3 points but, I had one INQ on it and 0 on the other CRAs. Yes - EQ did NOT reach parity with TU and EX until the lone INQ aged TWO years. VS3 does count INQs for a full 2 years.
Fascinating. So it's a more or less true statement for Vantage 3.0?
But how about FICO? It's my FICO scores that have been showing strength despite (or perhaps because of) increase in revolving utilization from 1% to 5%. Can it be that they too reward 5% utilization?
@Anonymous wrote:
@SouthJamaica wrote:I just had a devilish thought.
I have been casting about looking for reasons why, in these dark days, where my revolving utilization has been creeping up
from its usual 0 to 1% numbers to 5%, my FICO 8 scores seem to be strengthening instead of weakening.
And then I came upon this statement on Credit Karma:
"Creditors and lenders like to see between 5-7% used, as it shows you are responsible."
Can it be that getting utilization up to 5% is a good thing?
Do you know where it is on Karma's web site that you found that statement? I am really curious to read more about it.
Oops. I misspoke. It was on Credit Sesame, not Credit Karma.
It was in the Credit Usage section of my Credit Score Analysis.
@Anonymous wrote:Hi TT. It's curious that the simulator predicts that going from 1% to 4% should result in a steady decline in the score -- then going from 4 to 5% should cause an increase -- then 5 to 12 should result in a steady decrease again. That seems improbable. One can imagine that the developers would conceive that 4-5% is optimal, but then there would be an increase from 1 to 4 rather than a decrease.
Did you also see that in your real world data? Your V3 got worse going from 1 to 4%, then it went up, then from 6 onward it went down again?
Have you ever noticed any significant changes in FICO 8 between 0,1% to 8.99%?
With CK you used to be able to tease out monthly graphs for utilization as well as score for 6 month, one year and "all" time frames. It appears that I can no longer generate utilization graphs and time scale for score graphs is fixed. In any event, I had the opportunity to experience an 8% and a 9% aggregate utilization with VS3 due to a spike in reported spending on DW's card that I am AU on. Scores did drop to 829 at 9% AG UT and rebounded to 830 at 8% AG UT. More interestingly my lowest scorees seem to be occuring when UT was in the 3% to 4% range. Yes, my scores typically climbed when UT drops to the 0.5% to 1.5% from 2% to 3.5% range as predicted by the TransUnion VS3 simulator offered on CK's web site. My CK and Credit.com VS3 scores peaked at 835 when utilization was in the 4% to 5% range with 5 of 6 cards reporting balances back on 2/8/2016.
By comparison my Fico 04 and Fico 98 scores (3B report) all dropped substantially as shown on a 2/14/2016 report with 6 of 6 cards reporting. Fico 8 Enhanced scored dropped also - just not as much as "mortgage" scores. Again, for my profile, Fico scores are primarily reacting to # cards reporting balances - NOT to minor changes in aggregate utilization.
