Utilization Effects Across Multiple Cards Question

[Lucid08]

HI again all!

How much more pronounced are the score effects of a util increase when spread out across three cards, versus if the same util percentage is placed on just one card, or perhaps two?

I've read a lot of theory crafting about this, but as I've done my own experiments with this over the past two months, my score hasnt really been hit as hard as I would have thought it would as I've increased my util on my own three cards.

[haulingthescoreup]

Cautious reply, as I'm not really sure where you're headed here:

You are scored on total util as well as on individual card util. Lots of arguments on how this breaks down.

My own belief is that total util is the biggie, unless and until you have cards with high util. I don't know if it's only maxed-out that hurts (say, 85%+), or if there are tiers in individual card util as there are in total util. If so, then it would be something like max damage for 85%, next highest damage for 50 - 84%, next for something to 49%, and so forth. But that is pure speculation on my part. And I made up those tiers out of thin air.

So in your example, if all three cards get increased util, it's potentially worse than if it's all concentrated on one.

And btw, we've had lots of anecdotal evidence here that's it's OK (in terms of scoring) to have really high util on one card, as in a new BT. But if a second card gets up there, whammo. I don't know if this exemption for one card applies for everyone, or just for certain credit profiles.

Hope this speculative rambling helps, at least a bit.

[marty56]

While your total util maybe the same, spreading your util over multiple cards vs 1 card can effect your FICO score.

 First of all, having multiple cards reporting can lower your scores since you get dinged for too many cards reporting a balnce.  For my credit priofile, too many is 2.

Next if you move everyhting to 1 card and the util is high on that card, EX dings you and other cards could get spooked and lower your CL.

Also keep in mind that the goal to improve your FICO score vs saving money on interest may conflict.

Your optimal score will come from 1 card reporting a balance at 9% or lower (not 0).

[valley_man0505]

FWIW--I get all 3 of my FAKO's every month from Privacy Guard.  Under the "Factors Hurting Your Score" section, it said that "you are using more than 50% of your available credit on over 60% of your revolving accounts".

So, on the FAKOs at least, it appears that not only does your TOTAL utility matter, but the utility on each individual card is also factored in somehow.  Of course, this does not mean that the real FICOs are calculated this same way.

[marty56]

I would say that EX is the most sensitive util.  Please keep in mind that the advice given on FAKO score could actually hurt your FICO score.  That fact that the advice they are giving you matches that for FICO scores would amount to an acident.

Message Edited by marty56 on 11-24-2008 05:25 PM

[Junejer]

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marty56 wrote:
I would say that EX is the most sensxtive to indie util.  Please keep in mind that the advice given on FAKO score could actually hurt your FICO score.  That fact that the advice they are giving you matches that for FICO scores would amount to an acident.

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Agree 100%.

[Lucid08]

Well, I've been doing some experimentation, which is now complete(this phase anyways). These are my results from playing around with utilization over the past ~60 days.

To preface this I'm going to give my credit history details so as to provide a more complete picture for my results.

In Oct. 2007 I began my credit building journey by getting a small installment loan from a local finance company for a 6 month term. I paid off this loan in 2 months and subsequently got another loan from my work CU for a 6 month term beginning in Jan of '08. In Feb '08, with the help of a co-signer, I obtained a motorcycle loan for 48 months. I also have a med CA that is due to drop off at any time(almost 7 years old).

In July '08 I app'd for, and received an Orchard Card with a $500 CL, a NFCU nRewards Visa and MC each with a $2500 limit.

Prior to apping for the CC's my EQ FICO score was 621. One month later, after all 3 cards had reported, my score had risen to 643. At this point I had less than 3% utilization on the Orchard card, and 0% on the NFCU cards.

In Sept, right before my oldest installment account had hit the one year age mark, I decided to begin upping the utilization on my NFCU cards one at a time to see the effects on my score. Just before the reporting date in Sept. I went to 50% utilization on the NFCU Visa. I stayed at 0% on the MC and the orchard card stayed at 3%. My score dropped from the aforementioned 643 to 631 due to this, a 12 point drop for going above 50% on just one card.

Right before the reporting date in Oct. I went to 50% utilization on the NFCU MC, the VISA stayed the same at 50%, and the Orchard card stayed at 3% as well. My score dropped exactly 10 points from 631 to 621 as a result of this.

Now, here is the interesting part: Just prior to the reporting dates in November, I pushed both the NFCU VISA and MC to over 90% utilization, and the Orchard card to just over 90% utilization. My score dropped from 621 to 605 as of Nov. 15th(according to Scorewatch), a 16 point drop, as a result.

I'm not sure if I got any points during the October timeframe due to my oldest account aging to one year, as I did not have Scorewatch at that time. My AAOA as of Nov. 15th is 8 months. I am more than likely also getting points each month as my accounts age since my credit file is so new, but I have no data in which to prove anything concrete.

All of the aforementioned scores are EQ based FICO's pulled directly from this website using my Suze kit(which expired in Oct.) and Scorewatch(which I purchased in early Nov.).

So, I have a total of a 38 point drop from going from 3% utilzation on one card, to just over 90% across all 3 cards. Based on other threads I've read, and other posters inputs and experiences, I was looking for a much larger FICO score drop than just 38 points. Overall I dont see as much of a difference between the hit for total utilization as with individual utilization. I may pull my TU and EX scores/reports and see where those stand just to see if there are any huge differences between the three.

The next part of my experiment will be to, over the coming 3 months, pay down one card each month to below 9% right before the reporting date and see how much my score rises as I pay down each card.

::edited for spelling::

Message Edited by Lucid08 on 11-25-2008 08:47 AM

[Junejer]

Hey lucid, thanks for sharing. Everyone's experience with util and score droppage is 1) bucket driven and 2) individual because our reports are all different. I will tell you unequivocally that in my bucket I have lost nearly 100 points (EQ) by going from 5% to about 80% util on one card (rehabbing a house). I expect that my score will rebound back into the high 700s after util gets back under control (Dec or Jan?).