Understanding FICO® Scoring

[Smarty]

Hi Everyone

I have 2 credit cards. 1 is over the 35% limit threshold and the other is at 0%. Is it better to split half the money owed to both credit cards.

Thank You

[fused]

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Smarty wrote:

Hi Everyone

I have 2 credit cards. 1 is over the 35% limit threshold and the other is at 0%. Is it better to split half the money owed to both credit cards.

Thank You

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For max FICO points, it's best to have all of your revolving accounts reporting 1-9% util.

[Smarty]

can you elaborate more?

Thank You

[fused]

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Smarty wrote:

can you elaborate more?

Thank You

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Utilization Percentages

Utilization of revolving tradelines (i.e. CCs, overdraft protection and sometimes Heloc’s) accounts for 30% of your FICO scores. High util, over 50% can significantly lower your scores. A maxed-out or over-the-limit CC reporting will really TANK your scores.

To fully understand what Utilization percentages are, you must understand FICO scoring has two types of util percentage calculations, one that looks at the extent of utilization on individual revolving accounts and the other is cumulative and looks at the extent of utilization on all of your revolving accounts.

Example

Card 1: CL 5K, balance 1K = 20 percent (individual CC util)

Card 2: CL 3K, balance 800 =27 percent util (individual CC util)

Card 3: CL 2K, balance 100 = 5 percent util (individual CC util)

Add all three together and the cumulative UTIL is 19 percent. Not bad but again not ideal.

FYI, if your util reports < 50% a small increase in scores should occur, < 30% a little better and 1-9% is ideal. If all all of your revolving accounts report $0 it will not hurt your scores but again it's not ideal.

[Smarty]

I got it!!

Thank you so much