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Utilization

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velo90
Established Member

Re: Utilization

I think I will take advantage of the HELOC - I just got it two weeks ago and was thinking using the "zero percent" option but on my repayment timeline, the HELOC is probably better... not sure how it impacts my credit score as it hasn't shown yet but I imagine it's better than credit card utilization.

Message 11 of 19
Anonymous
Not applicable

Re: Utilization

Utilization matters! Case in point I have $70,700 in total credit and I typically carry about $1000 week to week in balances and always PIF. I checked my score this week and GET THIS....

 

-5 points due to increase in 1% credit utiliaztion. It showed $1500!!1 So carry 500 measly bucks more and get hit for 5 points.  In other words, a 5 point hit for the difference between 1.4% Ute and 2.1% Ute!

 

That in my opinion is ludicrious. Makes no sense.

Message 12 of 19
Anonymous
Not applicable

Re: Utilization

HELOCs are lines of credit, not loans.  I believe they show the same as a credit card.... (or I read that when I was looking into one?
)  

Message 13 of 19
Anonymous
Not applicable

Re: Utilization

As far as HELOCs go. I have a true HELOC and it does not appear to be included in my utilization calculations. My CC limits are 70,700  and my HELOC limit is 75,000 so if they included my HELOC limit, my uitilzation would be calcuated on 145,700 which i assure you - they are not. They are using 70,700.

Message 14 of 19
Anonymous
Not applicable

Re: Utilization


@Anonymous wrote:

As far as HELOCs go. I have a true HELOC and it does not appear to be included in my utilization calculations. My CC limits are 70,700  and my HELOC limit is 75,000 so if they included my HELOC limit, my uitilzation would be calcuated on 145,700 which i assure you - they are not. They are using 70,700.


Hi Plaidington.  There was discussion about this very thing a few years ago.  (May have been on another credit related forum.)  The idea is that FICO appeared at one time (and still may) to have imposed an in-house rule where, if a revolving line reached a big enough credit limit, that revolving account would be removed from one's utilization calculation.  Exactly where I can't remember, speculation appeared to be 40k.

 

And the motivation behind it was that FICO felt that a ginormous CL as one gets with a HELOC was screwing with the intent behind their models (as far as CC utilization).  So if the CL of any revolving account became too huge, the theory went (even a CC) you risked having it removed from your util calculation.  Thus it was a practical reason not to go trigger happy with endlessly pushing for CLIs beyond a certain point.

 

I know nothing about any of this in terms of hard evidence since all my revolving accounts have CLs < 30k.  Just relaying what I had heard.

 

 

Message 15 of 19
Anonymous
Not applicable

Re: Utilization


@Anonymous wrote:

@Anonymous wrote:

As far as HELOCs go. I have a true HELOC and it does not appear to be included in my utilization calculations. My CC limits are 70,700  and my HELOC limit is 75,000 so if they included my HELOC limit, my uitilzation would be calcuated on 145,700 which i assure you - they are not. They are using 70,700.


Hi Plaidington.  There was discussion about this very thing a few years ago.  (May have been on another credit related forum.)  The idea is that FICO appeared at one time (and still may) to have imposed an in-house rule where, if a revolving line reached a big enough credit limit, that revolving account would be removed from one's utilization calculation.  Exactly where I can't remember, speculation appeared to be 40k.

 

And the motivation behind it was that FICO felt that a ginormous CL as one gets with a HELOC was screwing with the intent behind their models (as far as CC utilization).  So if the CL of any revolving account became too huge, the theory went (even a CC) you risked having it removed from your util calculation.  Thus it was a practical reason not to go trigger happy with endlessly pushing for CLIs beyond a certain point.

 

I know nothing about any of this in terms of hard evidence since all my revolving accounts have CLs < 30k.  Just relaying what I had heard.

 

 


I would definitely say my 75K HELOC would skew my utilization in my favor. So having a limit on what reports totally makes sense. Thanks!! 

 

Message 16 of 19
Revelate
Moderator Emeritus

Re: Utilization


@Anonymous wrote:

HELOCs are lines of credit, not loans.  I believe they show the same as a credit card.... (or I read that when I was looking into one?
)  


Supposed to, mine does on EQ and TU but for some reason it appears to be reported as a home equity loan and potentially scored similarly on EX.  Either that or there's some pattern to number of installment vs. revolvers which I haven't teased out yet... I should get around to checking my EX v2 at some point, gained six points on EX FICO 8 when it reported at $100/27.5k

 

Some strangeness to be sure.




        
Message 17 of 19
Thomas_Thumb
Senior Contributor

Re: Utilization

Perhaps there is a dollar amount threshold regarding classification of the loan. This was observed with credit cards previously where cards over$35k were not included in the aggregate CC (that may be $50k now). A $50k threshold for classification of HELOC reporting?

 

Never had a HELOC so can't speak to a $50k hypothesis personally.

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 18 of 19
Revelate
Moderator Emeritus

Re: Utilization


@Thomas_Thumb wrote:

Perhaps there is a dollar amount threshold regarding classification of the loan. This was observed with credit cards previously where cards over$35k were not included in the aggregate CC (that may be $50k now). A $50k threshold for classification of HELOC reporting?

 

Never had a HELOC so can't speak to a $50k hypothesis personally.


Allegedly there is (internal FICO scource stated once upon a time, though not sure how privy they were to the actual worksing of the model as it's doubtful everyone at FICO knows it).  Wasn't stated what it was though, was theorized 35K based on some anecodtal evidence, I've suggested it might be 50K based on what some people have seen discounting revolving lines.

 

Mine just appears to be a case of inaccurate reporting and my own 27.5K I'm fairly certain will count as a straight revolver whenever I get around to testing it by zeroing out all my CC's.  Also get a smaller test next month as I just paid my first 5K worth of tuition with it which I'm guessing might skew the EX metric, good times.




        
Message 19 of 19
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