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New Contributor
Posts: 132
Registered: ‎08-27-2016
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Re: What actually is the "sweet spot"?


newhis wrote:

Isacking97 wrote:
 

Why just half of your revolving lines?  I have balance on all my cards but uti in total is only 5%


After many people experimenting, they found out that for most profiles, if you have less than 50% cards reporting balance, you get the best score.

 

There are people that do tests and let only 1 card report, 50% report or all report and their score doesn't change. This is a general rule but it could be different for a particular profile.

 

Let's say I'm at 780 without micromanage, and if I do I get 15 extra points, will that change an auto loan rate? in most cases no, but if you are at 730 and get 15 extra points it may help you get a lower rate.

 

As CGID, AZEO or less than 50% card reporting, less than 9% balance, etc. is not needed all the time, and for some profile maybe never.

 

Is just a practice that will help you get some extra points and will help you keep your debt in check.


Thank You I will try this, this could help me in the future!!


Starting Score: EX: 713 EQ: 698
Current Score: TU: 743 EQ: 748 EX: 740
Goal Score: 775





Valued Contributor
Posts: 2,432
Registered: ‎03-20-2014
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Re: What actually is the "sweet spot"?

Some general rules after many tests:

- AZEO, All cards Zero Except One

- less than 50% cards with balance, so if you have 3 or 4, only 1 report a balance

- overall util less than 9% (some people say less than 10% but CGID and others say that this value is rounded up, so it is better to be safe)

 

Some people do AZEO even if they have 10 or more cards.

Some people do AZEO with less than 9% the limit on the reporting card.

Some people do AZEO with only a $10 balance.

 

What we do, use the cards, try to be less than 30% always, avoid interest (PIF) by due date, use the 0% promos to carry balances if needed, pay the 0% balance 1 month early (personal preference).

 

Anyone can do their own tests. Remember that there are variables on each score and time is always changing.

Valued Contributor
Posts: 1,474
Registered: ‎08-12-2012

Re: What actually is the "sweet spot"?


BrutalBodyShots wrote:

sarge12 wrote:



BBB...I was basing importance on long term effect of current scoring model, which being a Point in time metric would have no effect on the score if you get it to optimal before the report is pulled. I agree, that if you do not it will have a greater effect than anything in our control except payment history...35% vs 30%. Until when and if there is a Utilization history built into the reports, I consider AAoA more important because opening up a lot of new accounts can lower the AAoA, and nothing you can do to keep it from lowering your score for years as the AAoA gradually increases again. The problem comes in when people have a high utilization, it is usually because they are spending more than they earn, and can't pay it down in a short amount of time. I too am a transactor...and you are 100% correct in the slice of pie, but if you know when you are applying for credit you can at the present time, make sure that whole slice of pie is in the pie pan. I only put it lower in importance because you can immediately fix that before a credit pull.


I see what you are saying, but making sure that whole slice of the pie [utilization] is in the pan may be easier said than done.  If someone is already at 1%-9% in aggregate utilization, they're already all set in this category, agreed?  All Transactors by definition will fall into this category.  Where the concern comes is for those that aren't Transactors.  I don't know where the OP falls or plans to fall with respect to that topic.  So, if we're talking about someone that's NOT in the ideal range, they must be at 10% or greater.  Say they're at 19% - A 10% paydown to get them into the ideal range [whole piece of the pie] in dollars can be significant.  My credit lines like many on this forum are around $100k.  There are plenty of people with double that or more.  This would represent $10k in CC debt.  That's considerable and an amount that I think most people wouldn't easily be able to just pay down or off in one shot.  I know I couldn't.  

 

I just think it's important that newer members here aren't steered in the wrong direction or given a false perception about utilization.  They shouldn't be led to believe that it only matters prior to apping and that for the majority of the year it's not a big deal.  Any number of life changing events could happen suddenly and make it difficult or impossible to pay down utilization, so keeping it in check at all times is recommended.  Teaching Transactor-type behavior is the best bet here.


I do agree with what you say here and being a transactor it is the only way I fly. I in no way suggest that someone become a revolver, but I see people who are even in the garden...and therefore not applying for credit...sometimes make post's like "My gosh, I accidently let my balance report this month and my score went down 20 points due to higher utilization"...I want to tell them, OK don't have a panic attack, do it right next month and all will be forgiven and every point returned. If however someone goes on some kind of crazy app spree and decreases their AAoA by 50% in one month, the best I can say is "just get in the garden and it will increase eventually"


TU fico08=817 6/24/17
EX fico08=806 6/24/17
EQ fico08=811 6/24/17
Garden since 4/5/2017

Community Leader
Senior Contributor
Posts: 4,240
Registered: ‎07-17-2014

Re: What actually is the "sweet spot"?


Taggerung wrote:

Thank you for responding CreditGuyInDixie!

 

I'll have to remember that about the AZEO.

 

So you think even for me with no credit it'd still be better to do it for 60 months? Don't you reap the benefits after the 60 months?
Another thing, is that when I do graduate with my industrial engineering degree I'll buy a new car. So that'd be closer to three years that I actually buy it. That's one of the reasons I was thinking short term too. 

So you think it'd still be better to go long term?

 

So I'd get some benefit to my credit (like the credit mix especially for me), but I wouldn't get near as much unless it's longer term? What if I was able to put more than $500 in short term? Like $750 or $1000?


Your questions are all answered in the guidance, which we gave you a link to.  Before you ask more questions about the Alliant SSL technique, you'll need to first "read, mark, learn, and inwardly digest" (Thomas Cranmer, 1549) the explanation in that guidance.  That's what it is there for.

 

But right now, I'll observe that what HeavenOhio says is right:

 

the summarized version is that you take out the loan, pay it down to about $44 right away, then spend 60 months paying off the $44. You'd be getting the benefit of a loan that's almost paid off (i.e. in its sweet spot) for almost five years.

 

Furthermore, far from the benefits beginning AFTER the loan term is over, the benefits in fact begin at month 1, and only last as long as the loan is open, which is why you want a long term for the loan.

 

You should not explore the SSL technique until after you spend at least another month learning the basic of credit scoring and get practice on how to obtain and read credit reports.  The brief little plan that Thomas Thumb gave you would be fine.  You can supplement that with the SSL technique 7 months from now if you like.

Established Contributor
Posts: 995
Registered: ‎04-14-2016

Re: What actually is the "sweet spot"?

[ Edited ]

Isacking97 wrote:

TygerHawke wrote:

Taggerung wrote:

I just received my first credit card. After seeing my siblings and family struggle and have to deal with bad credit, I deciced I'll be nothing like them.  I'm not much of a spended anyway.

I don't know any credit analysts and have gotten a few answers in person and online, so I deciced to come here.

I've heard that 30% of your credit line is the sweet spot for optimal credit. I've also heard that 25% is. I want the best credit possible as soon as possible. What really is the sweet spot for optimal credit?


Minimum 3 revolving lines and 1 installment line

 

Less than half your revolving lines should report a balance

 

You want to show <9% utilization on the line or lines that do report a balance for total optimization.


Why just half of your revolving lines?  I have balance on all my cards but uti in total is only 5%


 

One of the 'checkboxes' if you will for optimal use of revolving credit is less than half of all lines reporting a balance. That is the whole reason for having at least 3 lines - it only becomes mathematically possible at that point to have less than half of anything.

Valued Contributor
Posts: 2,064
Registered: ‎04-01-2015

Re: What actually is the "sweet spot"?


Taggerung wrote:

Thank you very much for the advice Tom Thumb! So you recommend I go ahead and get another card? Won't that look bad that I got two cards in the first six months of credit? I have no idea, that's just what it seems like.

So just clarification to see if I get you. Go ahead and get a Visa with my bank, do all of the appropriate things, and then in six months I should have a good credit score if I do everything well?


Everyone says (including that banker which SouthJamaica said is a rule you shouldn't) that I shouldn't get one. But you have an 850, so you'd know better than anyone!


Sorry for the late response here but some clarification is in order.

 

I would advise someone starting out to apply for two CCs - on the same day (as in my DDs case). That way neither application influences the other. Many, including DW, think applying for more than one starting out will hurt credit. That's not true.  If someone doesnot have a credit file to begin with how will the apps hurt future credit? Honestly, I don't think HPs associated with credit aps will show on a credit report if no file was in existance at the time of the Aps. I meant to ask DD to get a credit report to see if her file shows any HPs associated with the cards but, never did. Regardless of the HPs, neither CC issuer would have a clue that you applied for the other card in the above scenario. How could they?

 

Unfortunately, OP, you now have an active CC so approval and CL on a 2nd card may be influenced by the 1st one. Conservative wisdom suggests it might be best for you to wait 6 months before applying for more cards. At that time you should consider applying for two cards with different issuers on the same day to bring your total CCs to three.

Fico 8: .......EQ 850 TU 850 EX 850 (3/2017)
Fico 9: .......EQ 850 TU 850 EX 850 (3/2017)
Fico 4 .....:. EQ 804 TU 823 EX 830 (3/2017) EX Fico 98: 839 (3/2017)
VS 3.0:...... EQ 832 TU 832 EX 832 (3/2017)
Fico 8 BC:. EQ 887 TU 899 EX 900 (3/2017)
CBIS: ........LN Auto 940 LN Home 870 TU Auto 902 TU Home 950 (4/2017)
Valued Contributor
Posts: 1,474
Registered: ‎08-12-2012
0

Re: What actually is the "sweet spot"?


Thomas_Thumb wrote:

Taggerung wrote:

Thank you very much for the advice Tom Thumb! So you recommend I go ahead and get another card? Won't that look bad that I got two cards in the first six months of credit? I have no idea, that's just what it seems like.

So just clarification to see if I get you. Go ahead and get a Visa with my bank, do all of the appropriate things, and then in six months I should have a good credit score if I do everything well?


Everyone says (including that banker which SouthJamaica said is a rule you shouldn't) that I shouldn't get one. But you have an 850, so you'd know better than anyone!


Sorry for the late response here but some clarification is in order.

 

I would advise someone starting out to apply for two CCs - on the same day (as in my DDs case). That way neither application influences the other. Many, including DW, think applying for more than one starting out will hurt credit. That's not true.  If someone doesnot have a credit file to begin with how will the apps hurt future credit? Honestly, I don't think HPs associated with credit aps will show on a credit report if no file was in existance at the time of the Aps. I meant to ask DD to get a credit report to see if her file shows any HPs associated with the cards but, never did. Regardless of the HPs, neither CC issuer would have a clue that you applied for the other card in the above scenario. How could they?

 

Unfortunately, OP, you now have an active CC so approval and CL on a 2nd card may be influenced by the 1st one. Conservative wisdom suggests it might be best for you to wait 6 months before applying for more cards. At that time you should consider applying for two cards with different issuers on the same day to bring your total CCs to three.


I just want to add that it might be a good idea to research which CRA the credit card issuers pull from and try to apply to cards that pull from 2 different CRA's. The reason 2 of my scores are lower is the number of inqueries reported at the highest score is 1, the other two show 5 and 6.


TU fico08=817 6/24/17
EX fico08=806 6/24/17
EQ fico08=811 6/24/17
Garden since 4/5/2017

New Contributor
Posts: 132
Registered: ‎08-27-2016
0

Re: What actually is the "sweet spot"?

newhis, thank you, it works, I have paid one and my credit card before the statement cut and today it reported in 0, My EX is stuck in 728, but my transunion score when up 13 points ( 721 to 734 )

Thank Youuu

Starting Score: EX: 713 EQ: 698
Current Score: TU: 743 EQ: 748 EX: 740
Goal Score: 775





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