Question about utilization

[Viper786]

When it comes to utilization, for FICO scoring purposes, is it overall utilization or individual utilization on each card?

For example lets say there are 2 credit cards, Card A has a limit of 1000, card B has a limit of 9,000. 

If card A was maxed out and card B had a 0 balance, would that affect your credit the same as Card A having a 0 balance and card B having 1000 on it?

[grizindabox]

Viper, FICO considers both overall and individual utilization.  In your example, having the maxed out card would be worse than the balance on the other card.

[Anonymous]

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@Viper786 wrote:

When it comes to utilization, for FICO scoring purposes, is it overall utilization or individual utilization on each card?

For example lets say there are 2 credit cards, Card A has a limit of 1000, card B has a limit of 9,000. 

If card A was maxed out and card B had a 0 balance, would that affect your credit the same as Card A having a 0 balance and card B having 1000 on it?

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The short answer is that it's both. 

My understanding is that there's a hit for having any individual card over certain percentage thresholds, as well as for having more cards reporting (based on the ratio of cards you have to the number you have reporting.) 

In your example, you'd get hit worse by having the 1000 maxed out card and 0 on the 9000 than you would for having 1000 on the 9000 and 0 on the 1000. If those were the only two cards, you'd also be best doing it that second way vs. 500 on each, I believe because that would hit you both for having one card at 50% AND for having two cards reporting (assuming they were your only cards). If you have 6+ cards (or something like that) then the two reporting thing is diminished, I think. 

[Anonymous]

And maxing out a card doesn't do your scores any good, except some rare exceptions I have seen on the boards.

[DrZoidberg]

They look at both and both are equally important in terms of keeping low. It sucks because on some cards I have 13% but my overall each month is 0.2%.

[kdm31091]

It is both, but you can easily drive yourself crazy trying to figure out a "perfect" formula and "perfect" utilization.

My advice since it has no memory anyway (i.e. once you pay down any temporarily high util, your score rebounds as soon as it reports) is not to over stress about it. Some people get into really "maximizing" their scores, but to me, it's an awful lot of time and effort for something you can achieve and fix within one month at any given point anway if you want every single point. As long as it is "low" on each card (below 30%), you are not going to see a huge difference from optimizing, unless you only have one or two cards of course.

[Dw4250]

Antedocally, there is some evidence the breakpoints for scoring purposes are (from worst to best):

90%+ (very bad) < 50% < 30% < 10% < 0% < 1-9% (best)

So 1-9% is optimal.  You want to avoid 90%+ as that is bad for both scoring and possible AA from lenders.  Ideally, it's best to not let anyone card get over 50% for an extended period, and do not let your overall UTL get over 30%.

Again this is based on experiences from FICO members, so it's not concrete in the sense that these are guidelines laid out by Fair Isaac itself. 

As someone else said, it's best not to stress out over optimizing scores as it will yield very little difference (for me there is about a 5 pt difference between a 3% UTL and 19% UTL).  Only time these breakpoints may matter is if you are apping for something big (home) and want to optimize scores.

[Anonymous]

Is the scoring night and day on percentages, or is there some leniency if you have a couple store cards that are 50% and $150 balance? There probably is a furmula on amount owed versus income. I would like to think when your target is way up there just because you got groceries and the statement Cut

[grizindabox]

income has no factor in fico scoring.  If you have $150 reported on a card that has a $300 limit, it is 50% utilization on that card.

[Thomas_Thumb]

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@Dw4250 wrote:

Antedocally, there is some evidence the breakpoints for scoring purposes are (from worst to best):

90%+ (very bad) < 50% < 30% < 10% < 0% < 1-9% (best)

So 1-9% is optimal.  You want to avoid 90%+ as that is bad for both scoring and possible AA from lenders.  Ideally, it's best to not let any one card get over 50% for an extended period, and do not let your overall UTL get over 30%.

Again this is based on experiences from FICO members, so it's not concrete in the sense that these are guidelines laid out by Fair Isaac itself. 

As someone else said, it's best not to stress out over optimizing scores as it will yield very little difference (for me there is about a 5 pt difference between a 3% UTL and 19% UTL).  Only time these breakpoints may matter is if you are apping for something big (home) and want to optimize scores.

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I agree 100% with your last statement. Also, your breakpoints are a good rule of thumb for overall utilization. Categories listed in CK for VS 3.0 are: 0-9%, 10-29%, 30-49%, 50-74% and 75+% for overall credit utilization.  With respect to individual card utilization, I have not seen any affect on score other than a "max out" which is North of 80% for Fico 8.

Although not mentioned in your post, impact of aggregate (overall) utilization far out weighs impact of utilization on an individuar card basis except for a "max out".. Really not in the same ballpark. However, if someone has three or less cards it is hard to isolate individual utilization due to the impact on overall.