Util Percentage confusing the heck out of me... Some help understanding?

[Damikester892]

Hey guys, Currently building credit, AAoA is 6 months, 5 revolving accounts, 1 collection. No installment / mortgage loans.

for awhile I thought 30% was the "perfect" util percentage so I let all my accounts report at 30% for a couple months.

After reading some more I saw that 30% is good, 10% is better, 1% is best, etc. 

So I paid all my cards down to 2% and to my surprise, took a decent score hit, got confused, brought it up a little the next month, it increased a couple points but not back to where it was at 30%, so I brought it back up to 30% and it was normal, as a silly test I let it go to 31% last month and it dropped a couple points, I just wanted to confirm over 30% would drop instead of follow the weird increasing effect.

So in short, heres how the past couple months treated me, nothing else changed other then Util (and I guess AAoA naturally?)

My total revolving limit: $2851

Bankcard balance: $53 (2% util) = TU 621

Bankcard Balance $0 (0% util) = TU 609 (11 point drop when I paid it down from 2% util to 0%)

Bankcard Balance $228 (8% Util) = TU 621 (Back up 12 points)

Bankcard Balance $351 (12% Util) = TU 621 (No change from 8%)

Bankcard Balance $697 (24% Util) = TU 641 (Score jumped 20 points?)

Bankcard Balance $937 (33% Util) = TU 640 (Down one point)

The changes were all in 2 month span since my statement cuts are spreadout through the month so I was able to change the Util almost weekly by carefully paying each card, so the AAoA didn't increase a whole lot in 2 months since my oldest card is 12m and newest is 4m.

Anyone have any idea whats going on in this case?

I'm currently sitting at 30% and am capable of paying it down no problem but I don't understand why it keeps dropping when I do.. Confusing to say the least :\ 

[Anonymous]

My guess is that the changes you are seeing are being measured by the "alerts" provided by the myFICO 3B Ultimate product.  Is that right?  Unfortunately, when you receive an "alert" and a corresponding score change, it is quite possible (even common) for the score to have changed before the alert happened, and you are now only finding out about it.  Thus the "reason" given along with the alert is NOT the reason that the score changed, it is the thing that caused the alert to happen.  The score could have changed a week before for some other reason.

BTW, are any of your credit cards actually "charge cards"?  A true CC is one where you can (if you choose) make a minimum payment.  With a charge card you have to pay the full balance each month regardless.  Charge cards are not counted toward your utilization.

One thing that doesn't surprise me about the score changes as you describe them is that at one point you went down to $0 on all cards.  That surprised you when it caused a score  drop, but it is in fact what you should expect.  FICO views a 0.000% utilization as a bad thing.  It also views anything much more than 5% as bad, though the penalty is only slight as long as the % is still low.

Do you happen to remember the NUMBER of cards showing a positive balance at all of these points?  It your total utilization went up, but you had paid also paid a few of your cards down to $0, that could easily cause your score to drop as a whole.  This is because FICO cares about the number of cards showing a positive balance.  Exactly one card is ideal.  0 cards is bad but so is more than 1.

[Anonymous]

So my response above was aimed at your specific question -- i.e. what might explain the patterns of ups and downs.

But you may just needs some simple advice.  So here it is.  For about three months in a row, make sure that 4 of your 5 cards report a $0 balance.  For the other card make sure that it reports a small positive balance, with your total utilization being 1-4%.  (It could be really low, like 0.1% if you want.)  That one card needs to be a true credit card.

Keep the rest of your profile stable.  No lates, no inquiries, no new accounts.  Then get all your new scores at your next 3B quarterly report.  That's your baseline for what you can hope to achieve without removal of derogs or a lot of time or taking out an installment loan.  (Do not take out an installment loan for credit score purposes without carefully talking it through with the folks here first.)

When you have your baseline, you can stop worrying about your utili.  Just keep it fairly low and remember that you can regain points in a month or two by obeying the "all cards at $0 except one with a small balance" rule.

[Damikester892]

Thank you very much, creditguyindixie!

In my first stage it was just one card reporting $50+, then I paid that card to 0 and when the statement cut it was 0 across the board, that dropped my score so I let my next card that was about to cut report at $200+ for the 8% overall utili, then seeing a score increase from that I let the next card report at $113 bring the utili up a bit and did the same thing up to 31%, so it started out as one card reporting a $50 balance and 4 reporting 0 but it was only that way for a week or two so maybe the alert was just not caught up since it was all so close like you mentioned?

I'll give the one card reporting 1% and the others reporting 0 for four months a shot, and yep they are all credit cards and no charge cards.

[Anonymous]

Great.  Good luck!

I encourage you to head over to the rebuiilding forum to see if the collection can be removed.  They have all kinds of tips and tricks for that.  It's not an area I know much about, but it would help you a lot.

The other thing that could help you a decent amount is adding a small $500 Share Secure loan.  If you are willing to wait for another few weeks, a group of us will be posting some info in a single easy-to-follow thread about that.  It only helps people who have no installment loans, open or closed.  (It can give a small amount of help to people who have no open loans but do have a closed loan.)

If your primary goal is seeing your score rise, then the other thing that will benefit you is resolving to open no more accounts for the next 19 months (with the possible exception of a Share Secure loan, as mentioned above).  You have five cards right now, which is more than enough cards to drive a score to reach into the 840s.  If you can get your AAoA to exceed 2.0 years then you should see some substantial benefit (you will also benefit by your inquiries falling off and all your cards being > 1 year old).  You will also gain some benefit when your AAoA is > 1.0 as well.

[Damikester892]

Thank you! That is indeed my goal at the moment, a higher score, however one of my cards is currently a Credit one card that I plan on closing at 11 months (June) and a secured capital one card that isn't going to grow anymore unless I deposit more cash so I plan on closing that as well. I have a QS1 which I've been using and paying off multiple times a month. Also have a Barclay rewards which Is my 2nd most used, lastly my 5th card was unintentional I opened a bank account at Wells Fargo and the accountant was just going so fast I wasn't quite paying attention next thing I know I have a $700 wells Fargo card haha.

But that secured loan I'm definitely interested in keeping an eye on.

I'd like to have my QS1, my barclaycard and a Discover IT card and then just build with those three and close my secured capital one and creditone card. The wells Fargo I may use here and there since it's a decent card with no AF.

So the only card I want next is the discover IT and then I would love to let them all grow over 2 years, obviously I know you can't say for sure but I was thinking about applying for the discover IT at 660 credit score, hoping to achieve that in 4 months of the method we mentioned above with one card reporting a balance. Think that's plausible or get that dream out of my head? Haha

[Anonymous]

The Discover would be a nice card for you.  My understanding is that they are friendly to people with thin but clean profiles (and also of course thicker but clean as well).  You profile has a collection on it which may lower the extent that they are eager to approve, but see how high you can get your scores in the next few months and then talk to the people over in the CC forum. 

Back when I had derogs was a long time ago (1999) and web sites like this may not have been around.  I just hid for a long time and 7 years later everything bad had fallen off.  So advising people on how to add more cards and accounts while a profile is young, thin, or dirty is not something I know much about.  I do know a little about how the FICO scoring system works.

Work on stabilizing your utilization, do research on the Discover, and watch for the post on the SS loan.  Good luck!

[SouthJamaica]

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@Damikester892 wrote:

Hey guys, Currently building credit, AAoA is 6 months, 5 revolving accounts, 1 collection. No installment / mortgage loans.

for awhile I thought 30% was the "perfect" util percentage so I let all my accounts report at 30% for a couple months.

After reading some more I saw that 30% is good, 10% is better, 1% is best, etc. 

So I paid all my cards down to 2% and to my surprise, took a decent score hit, got confused, brought it up a little the next month, it increased a couple points but not back to where it was at 30%, so I brought it back up to 30% and it was normal, as a silly test I let it go to 31% last month and it dropped a couple points, I just wanted to confirm over 30% would drop instead of follow the weird increasing effect.

So in short, heres how the past couple months treated me, nothing else changed other then Util (and I guess AAoA naturally?)

My total revolving limit: $2851

Bankcard balance: $53 (2% util) = TU 621

Bankcard Balance $0 (0% util) = TU 609 (11 point drop when I paid it down from 2% util to 0%)

Bankcard Balance $228 (8% Util) = TU 621 (Back up 12 points)

Bankcard Balance $351 (12% Util) = TU 621 (No change from 8%)

Bankcard Balance $697 (24% Util) = TU 641 (Score jumped 20 points?)

Bankcard Balance $937 (33% Util) = TU 640 (Down one point)

The changes were all in 2 month span since my statement cuts are spreadout through the month so I was able to change the Util almost weekly by carefully paying each card, so the AAoA didn't increase a whole lot in 2 months since my oldest card is 12m and newest is 4m.

Anyone have any idea whats going on in this case?

I'm currently sitting at 30% and am capable of paying it down no problem but I don't understand why it keeps dropping when I do.. Confusing to say the least :\ 

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I think the changes aren't as sensitive to the balance at any given moment as you assume they are, because the various cards report at different times.

If you let 4 cards report a zero balance, and have 1 card reporting below 10%, and follow that principle for 2 months, all other things being equal you'll see your scores at the top end of the range or better.