Utilization questions Help needed

[sgs10]

I have 3 accounts so iis it better to pay all the accounts in full every month or just leave a $5 balance. which is good and which will help to increase my score?.

[MarineVietVet]

---

@sgs10 wrote:

I have 3 accounts so iis it better to pay all the accounts in full every month or just leave a $5 balance. which is good and which will help to increase my score?.

---

There is no one size fits all approach but the tactic that seems to work for many people is let only one of your cards report a small (<9% of credit limit) balance each month and then PIF before the due date. Have all the other cards always report a zero balance.

But be aware that TU and EQ may look at this a bit differently so you might have to play around a little with the balances to see what works best for you.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[marty56]

It never helps your FICO score to revolve a balance.  Always PIF.  It is the reported balance and paying on time that helps or hurts your score, not that you revolve a balance.  You can control how much reports to the CRAs by paying before the statement date.

[sgs10]

So do u mean to pay off the balance before the statement hits?

[smallfry]

I used to think TU rewarded no accounts reporting a balance but from my experience it didn't matter whether I had a balance on 1 card or no cards. 

[MarineVietVet]

---

@sgs10 wrote:

So do u mean to pay off the balance before the statement hits?

---

I'm not sure who you are talking to. If you will hit the "Quote" button and then type your reply other posters will know who you are talking to or answering.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[RobertEG]

I would add that this is an issue of fine-tweaking your scoring in utilization.  Scoring in utilization has no historical memory, so next month wipes out the current month.

What this means in a practical sense is that maintaining fine-tweaking each and every month is more academic than practical

Keep utils low.  Then, at around two-months before actually applying for new credit, which is when your credit score becomes something that will be used in an actual credit evaluation, concentrate on the fine-tweaking.

First, and most important, is to minimize your overall % util.  Then, to minimize % util on each individ card.  Then to have less than half your cards reporting a balance.

Whether 0% is better or worse than, lets say 5%, is not something that Fair Isaac has ever disclosed.

In my opinion, if you have alll cards under 10%, and less than half of the cards are reporting a balance, that would mathematically put your overall % util at around 5%.

That is pretty good fine tweaking, and how I look at it.

[MarineVietVet]

---

@RobertEG wrote:

I would add that this is an issue of fine-tweaking your scoring in utilization.  Scoring in utilization has no historical memory, so next month wipes out the current month.

What this means in a practical sense is that maintaining fine-tweaking each and every month is more academic than practical.

Keep utils low.  Then, at around two-months before actually applying for new credit, which is when your credit score becomes something that will be used in an actual credit evaluation, concentrate on the fine-tweaking.

First, and most important, is to minimize your overall % util.  Then, to minimize % util on each individ card.  Then to have less than half your cards reporting a balance.

Whether 0% is better or worse than, lets say 5%, is not something that Fair Isaac has ever disclosed.

In my opinion, if you have alll cards under 10%, and less than half of the cards are reporting a balance, that would mathematically put your overall % util at around 5%.

That is pretty good fine tweaking, and how I look at it.

---

And it can become very tiresome. I agree with Robert that this kind of fine tuning is impractical unless you are trying to boost your score right before applying for credit.

Or if you just need a hobby. 

There are anecdotal stories of what seems to have been the best approach for this person and that person but it comes down to what works best for you.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[vanillabean]

---

@MarineVietVet wrote:
Or if you just need a hobby. 

---

That must be it because there's no loan or credit application coming up, but I have mapped out every score fluctuation for the rest of the year that I can possibly think of. They are estimates of course. I bother, because my New Year's resolution was an EQ of 800. This is the one, no losing weight, no drinking more water and no going earlier to bed.

A research study concluded your best chances are sticking with just one goal. And my EQ FICO is it. I've been good this year, but not perfect. I don't strive for perfect, have no plan to get an installment loan as a lottery ticket for the 850. I just like to see where I can go with what I have.

This may well be valid for anyone. Live within your means, and you shall prosper. Personal finance personalities point out an emergency fund can start out with $5 a month. They say any journey begins with one step. Of course that first step requires far more consideration than any of the following steps. Books have been written about this.

Yes, fine-tweaking must be my hobby. Why else would very married me request through interlibrary loan a book entitled Prenups for Lovers?

[RobertEG]

For "tweakers!"

FICO made a statement in one of their webinars a few years ago that revolving % util is scored at approx. half for overall % util, and the other half for combined util of individual cards. 

This is my understanding of how this would break down in actual scoring.

Util of credit is approx 30% of overall FICO score.  That is apprix 255 points max.

If half of this is based on overall % util, that is approx 125 points weighted to overall util, and the other 125 or so assigned on a combined asessmenent of indiv card utils.

For individ card util, there are two factors,  The indiv % util on each card, and the number of cards, expressed as a % of total cards, that report any balance.

That is as specific as Fair Isaac breaks it down for us.

So make the assumption that you have four credit cards.  That amounts to five sub-factors under indiv. card  % util.  The indiv % util on each of the four cards, and the % of cards showing balances.  Dividing 125 by 5, then a general estimate is that % util on each card weighs in at around 25 points apiece, and % of cards reporting a balance weighs in also at around 25 points.  I know these are just broad assumptions, but I think it makes the general point of the importance of overall % util versus the efffect of indiv card utils.  It may very well be true that FICO does not score each indiv card the same (such as in the assumption I made that all count equally at 1/5), and may weigh higher percentage util indiv cards more than lower % util cards, but they could never count as much as overall % util.  Some assumptions are necessary, since Fair Isaac does not offer specific details of their actual scoring algorithms. But I think my assumptions are reasonable for general "tweaking.".

From all that Fair Isaac has disclosed, it would appear to me that overall % util counts approx 4-5 times more in scoring than the indiv util of a single card.