Utilization question

[Anonymous]

...if I have four bank cards, 3 of which have zero utilization and 1 which has 100% utilization, will FICO say I have 25% utilization or 100% utilization?

[Anonymous]

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@Anonymous wrote:

...if I have four bank cards, 3 of which have zero utilization and 1 which has 100% utilization, will FICO say I have 25% utilization or 100% utilization?

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Is the answer "both" possible?  Certainly not the way to manage that hypothetical if it were in real life.

[BigBS]

It will show 25% overall utilization, the maxed out card will still bring your score down.

[takeshi74]

Both individual and overall matter.  Overall is 25% but individual is 100%.  Don't max one card unless you can drastically drop it very quickly.

[Aprile421]

Wouldn't it matter on the limits?  say you had 2 cards at $500 limit, 1 at $1000 limit and  1at $5000 limit if you maxed the 5k card your util would be more than 25%. It matters on limits and how much of your total credit limits you use. Atleast that is the way I thought it worked.

[olehammer]

@Aprile421, I agree. It's total balance divided by total limit.

[Anonymous]

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@olehammer wrote:
@Aprile421, I agree. It's total balance divided by total limit.

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Ahhhh, yes.  What I am trying to figure out in my head (and math is not my forte) is whether doing balance transfers has any effect on your utilization if there is no spend at all on your cards.  My guess is - no?

[Dalmus]

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@Anonymous wrote:

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@olehammer wrote:
@Aprile421, I agree. It's total balance divided by total limit.

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Ahhhh, yes.  What I am trying to figure out in my head (and math is not my forte) is whether doing balance transfers has any effect on your utilization if there is no spend at all on your cards.  My guess is - no?

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 Correct...  The balance transfer would not effect your overall utilization.  But any individual card above 90% is considered "maxed out" and will still hurt your score.  If you can balance transfer enough off of that 100% card to bring it under 90%, you should see a bit of a bump in your score even though your total utilization won't change.

[Anonymous]

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@takeshi74 wrote:

Both individual and overall matter.  Overall is 25% but individual is 100%.  Don't max one card unless you can drastically drop it very quickly.

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Hey takeshi, could you elaborate on "quickly"?

Do you mean paying all (or most) of it before statement cuts? Or can we let the entire balance post and just PIF after statement cuts? 

[redbeard]

Quickly is always in reference to what your goal is.

Any card reporting over 90% utilization (on that card) will put you in the penalty box for your score.  Depending on your profile, you could lose 5 - 20 points for this alone.

If you pay it before the statement cuts, then it doesn't report to the CRA's, which means it has no impact on the score.

If you pay it later, then you will get dinged, but then recover once you do pay it.  No real issues if you don't need to apply for credit or if you have breathing room in your profile.  Score will recover once a lower balance reports.

Fico is a very complex algorithm.  We tend to distill it down to some black and white things on this forum, but the truth is, everything interacts with everything, which is why the answer to your original question is 'both'.  

Dan