Utilization memory (or lack of, it question)

[Remedios]

I've read that utilization per se has no memory, but my question is, does the algorithm itself treats individual profiles differently  when utilization pattern changes (indicating that some memory is retained on that particular profile ), such as somebody who always reports ultra low balances starts spiking at 30% or more,  e.g having additional penalty in addition to utilization bracket change?  

I guess what I'm trying to ask (albeit quite inarticulately) is how much, if any, pattern recognition plays the role in scoring or would the changes in scoring (penalty) be attributable only to brackets in which newly reported utilization falls. 

[SouthJamaica]

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wrote:

I've read that utilization per se has no memory, but my question is, does the algorithm itself treats individual profiles differently  when utilization pattern changes (indicating that some memory is retained on that particular profile ), such as somebody who always reports ultra low balances starts spiking at 30% or more,  e.g having additional penalty in addition to utilization bracket change?  

I guess what I'm trying to ask (albeit quite inarticulately) is how much, if any, pattern recognition plays the role in scoring or would the changes in scoring (penalty) be attributable only to brackets in which newly reported utilization falls. 

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[Anonymous]

The algorithm only looks at utilization at that exact moment in time.  No history.  It's just snapshot.  Think of it as putting two paper towel tubes over your eyes; what it sees is very limited.  Someone could be at 90% utilization for a decade and drop it to 50% and someone else could be at 1% utilization for a decade and raise it to 50%.  All things being equal on their profiles, their scores would be identical if pulled once that 50% utilization reported.

[sto0pyd]

This is a question that's somewhat related to the topic Would my credit score be adversely affected if one card has a utilization ratio of ~53%, but with an of overall utilization of ~3%? I have a revolving balance of ~$6k that I'll need about 5 months to pay off. Comenity/Total Rewards sent me an offer to transfer the balance over with no fees @ 0% until June 2019. So I'm guessing, I might as well not stress out in paying the balance off in full in 5 months if I'm going to be given a little over a year to pay it off at no cost. I want to accept the offer, but the limit on the card is only at $ 11,500. I've tried requesting an increase without an inquiry but am getting denied   I have no major purchases planned within the next year, but I don't want my FICO to take a dip because of the high utilization on one card.

[Anonymous]

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I have no major purchases planned within the next year, but I don't want my FICO to take a dip because of the high utilization on one card.

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Why is it a problem if your FICO goes down temporarily?  The key thing is that you aren't planning to buy a car or a house or anything like that and therefore (key point) you do not need your score for anything.

But the answer to your question is that FICO does care about individual utilization (each card considered by itself).  The penalty for being above 49% might be fairly small, and it might go away completely when you get your card to under 48.9% -- though I wouldn't count on it disappearing until each card is under 28.9%.

[atarvuzdar]

To be fair, creditors do CLD/close accounts if a score decrease or util increase raises a red flag for them. I'm not sure I'd say we don't need our score for anything unless we're actively seeking credit.

[Anonymous]

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To be fair, creditors do CLD/close accounts if a score decrease or util increase raises a red flag for them. I'm not sure I'd say we don't need our score for anything unless we're actively seeking credit.

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Score decrease yes, utilization increase not likely.  99% of the time AA is taken in the form of a CLD it's because of a late payment.  As we all know, a late payment causes a large score drop... but most importantly, it suggests to all of your lenders that you aren't able to pay your bills.  That's a huge red flag and one that prompts AA.

Utilization increases rarely result in AA in and of themselves.  I know someone that's been at 94%-96% aggregate utilization for over a year now across 8-9 credit cards and none of them have taken AA (no CLDs) because they make at least the minimum payments every month.  Most creditors are completely content with sitting back and collecting interest month after month, so long as the card holder is making on-time payments.  One missed payment is all it takes though and once it's reported as late it's game on for all creditors to start slashing away.