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"high balance" and FICO 8

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Anonymous
Not applicable

"high balance" and FICO 8

I ran across the following passage today.  It's from FICO, explaining the ways that FICO 8 differs from other FICO models:

 

High credit card usage

While all FICO® Score versions consider high credit card utilization to be reflective of higher risk, FICO® Score 8 is more sensitive to highly utilized credit cards. So if a credit report shows a high balance close to the card's limit, FICO® Score 8 will likely be more impacted than a previous score version.

Keeping credit card balance low can help maintain or improve the score.

 

http://www.myfico.com/crediteducation/fico-score-8.aspx

 

The thing that struck me is that they deliberately use the term "high balance."  (Emphasis mine in the quote.) That's a "term of art" -- it refers to a very specific field on your credit report.  It means "the highest balance this card has ever reported."  It does not mean "your current balance which is pretty darn high."

 

Note that, if they meant your current balance, they could have easily omitted the word "high": i.e. "if a credit report shows a balance close to the card's limit...."

 

Now there's no question that CC utilization is computed using the current (most recently reported) balance.  I know that.  I am just wondering whether the language on the page could (possibly) mean what it says: that FICO 8 has an additional factor, which is to compare your highest historical balance with your credit limit, presumably as an attempt to measure whether you have ever (in the time you have used the card) came close to maxxing it out. 

 

I am also open to the possibility that FICO has just miscommunicated here, by allowing a stray extra word ("high") to imply something they do not mean.  In fact, that's my guess as to what happened, though I am curious to hear if anyone knows for sure.  If so, they should definitely cut it and just say "balance." 

 

 

 

 

Message 1 of 45
44 REPLIES 44
Revelate
Moderator Emeritus

Re: "high balance" and FICO 8


@Anonymous wrote:

I ran across the following passage today.  It's from FICO, explaining the ways that FICO 8 differs from other FICO models:

 

High credit card usage

While all FICO® Score versions consider high credit card utilization to be reflective of higher risk, FICO® Score 8 is more sensitive to highly utilized credit cards. So if a credit report shows a high balance close to the card's limit, FICO® Score 8 will likely be more impacted than a previous score version.

Keeping credit card balance low can help maintain or improve the score.

 

http://www.myfico.com/crediteducation/fico-score-8.aspx

 

The thing that struck me is that they deliberately use the term "high balance."  (Emphasis mine in the quote.) That's a "term of art" -- it refers to a very specific field on your credit report.  It means "the highest balance this card has ever reported."  It does not mean "your current balance which is pretty darn high."

 

Note that, if they meant your current balance, they could have easily omitted the word "high": i.e. "if a credit report shows a balance close to the card's limit...."

 

Now there's no question that CC utilization is computed using the current (most recently reported) balance.  I know that.  I am just wondering whether the language on the page could (possibly) mean what it says: that FICO 8 has an additional factor, which is to compare your highest historical balance with your credit limit, presumably as an attempt to measure whether you have ever (in the time you have used the card) came close to maxxing it out. 

 

I am also open to the possibility that FICO has just miscommunicated here, by allowing a stray extra word ("high") to imply something they do not mean.  In fact, that's my guess as to what happened, though I am curious to hear if anyone knows for sure.  If so, they should definitely cut it and just say "balance." 

 

 

 

 


100% confident that's wrong nomenclature and they meant current rather than historical.

 

Feedback it to the admins, or if you don't wish to I can as you're right that's a confusing way to word it.




        
Message 2 of 45
Anonymous
Not applicable

Re: "high balance" and FICO 8

Thanks, Revelate.  I have no idea how to give feedback to the admins -- so yeah, if you don't mind punting that up the chain that would be great!

 

Interestingly enough, this is something people naturally wonder/worry about.  Does FICO ever use my "high balance" field in a damaging way?  Do I therefore need to keep my CC balance always low -- so that my HB field never gets too big?  I did a search on the phrase HIGH BALANCE and I saw that this question come up a lot.

 

If people are naturally inclined to worry that the field could be used to spank them, then that's all the more reason for that page not to explicitly say so.

 

Thanks again!

Message 3 of 45
NRB525
Super Contributor

Re: "high balance" and FICO 8

Well, if it is a problem, I'm not seeing it.

During the credit bubble, I never exceeded my available credit, but a concerted set of CLD by all cards but Capital One leads to my High Balance being way upside down. If this were part of scoring, I would have no way to correct or mitigate this.

 

So my vote is that the text is lazy language.

 

Here's my "high balance" listing:

 

High Balances.JPG

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
April 2022 EQ=811 TU=807 EX=805 - TU VS 3.0 765
Message 4 of 45
Thomas_Thumb
Senior Contributor

Re: "high balance" and FICO 8

 

My take on the difference the text may be alluding to is as follows:

 

1) Fico 8 is not as concerned with the # of cards being used compared to previous models. For example; if you have 8 cards and use 5 Fico 8 may not view this as a negative. However, previous models (Fico 4 for example) may flag this because it looks at a "high %" of cards showing a balance as a negative even if your balance is very low.

 

2) Fico 8 (per your quote) adds weight to the % of overall credit you are using (both in aggregate and on a per card basis). So if you go over certain threshold(s) you will see more of a negative impact on Fico 8 than with older (Fico 4, Fico 98) models.

 

Generally credit line is used to calculate % utilization but if no credit line is shown, it uses highest amount ever charged in the denominator to calculate % utilization.


@Anonymous wrote:

I ran across the following passage today.  It's from FICO, explaining the ways that FICO 8 differs from other FICO models:

 

High credit card usage

While all FICO® Score versions consider high credit card utilization to be reflective of higher risk, FICO® Score 8 is more sensitive to highly utilized credit cards. So if a credit report shows a high balance close to the card's limit, FICO® Score 8 will likely be more impacted than a previous score version.

Keeping credit card balance low can help maintain or improve the score.

 

http://www.myfico.com/crediteducation/fico-score-8.aspx

 

The thing that struck me is that they deliberately use the term "high balance."  (Emphasis mine in the quote.) That's a "term of art" -- it refers to a very specific field on your credit report.  It means "the highest balance this card has ever reported."  It does not mean "your current balance which is pretty darn high."

 

Note that, if they meant your current balance, they could have easily omitted the word "high": i.e. "if a credit report shows a balance close to the card's limit...."

 

Now there's no question that CC utilization is computed using the current (most recently reported) balance.  I know that.  I am just wondering whether the language on the page could (possibly) mean what it says: that FICO 8 has an additional factor, which is to compare your highest historical balance with your credit limit, presumably as an attempt to measure whether you have ever (in the time you have used the card) came close to maxxing it out. 

 

I am also open to the possibility that FICO has just miscommunicated here, by allowing a stray extra word ("high") to imply something they do not mean.  In fact, that's my guess as to what happened, though I am curious to hear if anyone knows for sure.  If so, they should definitely cut it and just say "balance." 

 

 

 

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 5 of 45
Revelate
Moderator Emeritus

Re: "high balance" and FICO 8


@Thomas_Thumb wrote:

 

My take on the difference (as written) is as follows:

 

1) Fico 8 is not as concerned with the # of cards being used compared to previous models. For example; if you have 8 cards and use 5 Fico 8 may not view this as a negative at all. However, previous models (Fico 4 for example) may flag this because it looks at "a high "% of cards showing a balance as a negative even if your balance is very low. Note: This the difference in this factor appears to be true across all profiles

 

2) Fico 8 (per your quote) adds weight to the % of overall credit you are using (both in aggregate and on a per card basis). So if you go over certain threshold(s) you will see more of a negative impact on Fico 8 than with older (Fico 4, Fico 98) models. Note: The difference in this factor appears to be profile dependent

 

Generally credit line is used to calculate % utilization but if no credit line is shown, it uses highest amount ever charged in the denominator to calculate % utilization.

 

I have wondered if Fico has some metric that looks at highest credit charge during the last 12 (as opposed just the most recent month metric) on each card relative to its CL, but I have no hard data to support/refute this hypothesis.

 


@Anonymous wrote:

I ran across the following passage today.  It's from FICO, explaining the ways that FICO 8 differs from other FICO models:

 

High credit card usage

While all FICO® Score versions consider high credit card utilization to be reflective of higher risk, FICO® Score 8 is more sensitive to highly utilized credit cards. So if a credit report shows a high balance close to the card's limit, FICO® Score 8 will likely be more impacted than a previous score version.

Keeping credit card balance low can help maintain or improve the score.

 

http://www.myfico.com/crediteducation/fico-score-8.aspx

 

The thing that struck me is that they deliberately use the term "high balance."  (Emphasis mine in the quote.) That's a "term of art" -- it refers to a very specific field on your credit report.  It means "the highest balance this card has ever reported."  It does not mean "your current balance which is pretty darn high."

 

Note that, if they meant your current balance, they could have easily omitted the word "high": i.e. "if a credit report shows a balance close to the card's limit...."

 

Now there's no question that CC utilization is computed using the current (most recently reported) balance.  I know that.  I am just wondering whether the language on the page could (possibly) mean what it says: that FICO 8 has an additional factor, which is to compare your highest historical balance with your credit limit, presumably as an attempt to measure whether you have ever (in the time you have used the card) came close to maxxing it out. 

 

I am also open to the possibility that FICO has just miscommunicated here, by allowing a stray extra word ("high") to imply something they do not mean.  In fact, that's my guess as to what happened, though I am curious to hear if anyone knows for sure.  If so, they should definitely cut it and just say "balance." 

 

 

 


Dude seriously Smiley Happy.  You are not correct in this based on everyone else's data to date.  I will keep cutting and pasting but please stop ignoring everyone else's data because an 850 on a FICO 8 does not a good testing platform make.  Or let a balance report on all your cards and see if you come off the 850, every single one.  Betcha it does and that's not what you did from your last test that I saw.

 

HistoricalScoreBal ReportedTotal TLsAgg. Util %Change
Equifax Beacon 9693290.4 
Equifax Beacon 9690391.3-3
Equifax Beacon 9690491.50
Equifax Beacon 9686591.6-4
Equifax Beacon 9703591.6N/A
Equifax Beacon 9707491.24



        
Message 6 of 45
Thomas_Thumb
Senior Contributor

Re: "high balance" and FICO 8

Revelate,

 

All I am saying is there are a # of posts here (profiles with scores in the 700s) reporting no changes in Fico 8 score when they changed # cards reporting a balance. Sure, the score is affected at some point ... but is it given as much weight as with the Fico 4 model?- From what I have read not as much as with Fico 4 (let's forget about my profile for the moment)

 

The bolded statement, as I read it, implies Fico 8 adds more weight to utilization % relative to older Fico models. Whether correct or not, that is how I interpret the meaning.

 

Ultimately, more weight on one factor  generally means less weight on another to equal out.

 

Smiley Happy

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 7 of 45
Anonymous
Not applicable

Re: "high balance" and FICO 8

Hey TT.  I'm just not sure how the passage I quoted implies anything about the number of accounts showing a balance.  I realize that you personally believe what you said in #1 (you think that FICO 8 is less punitive about # accounts showing a balance) but I just don't see how the text quoted even remotely suggests that.

 

What is probably the case is that their meaning is exactly as quoted except for the word "high" omitted.  In other words the text is referencing precisely one sub-factor (the utilization % for each revolving tradeline) and the intent is to say that FICO 8 is more punitive if the balance of any particular tradeline is getting close to its CL -- more punitive than previous FICO models were. 

 

Aside from that, the text I quoted doesn't indicate whether other factors are viewed more heavily or not.

Message 8 of 45
Anonymous
Not applicable

Re: "high balance" and FICO 8


@Anonymous wrote:

I ran across the following passage today.  It's from FICO, explaining the ways that FICO 8 differs from other FICO models:

 

High credit card usage

While all FICO® Score versions consider high credit card utilization to be reflective of higher risk, FICO® Score 8 is more sensitive to highly utilized credit cards. So if a credit report shows a high balance close to the card's limit, FICO® Score 8 will likely be more impacted than a previous score version.

Keeping credit card balance low can help maintain or improve the score.

 

http://www.myfico.com/crediteducation/fico-score-8.aspx

 

The thing that struck me is that they deliberately use the term "high balance."  (Emphasis mine in the quote.) That's a "term of art" -- it refers to a very specific field on your credit report.  It means "the highest balance this card has ever reported."  It does not mean "your current balance which is pretty darn high."

 

Note that, if they meant your current balance, they could have easily omitted the word "high": i.e. "if a credit report shows a balance close to the card's limit...."

 

Now there's no question that CC utilization is computed using the current (most recently reported) balance.  I know that.  I am just wondering whether the language on the page could (possibly) mean what it says: that FICO 8 has an additional factor, which is to compare your highest historical balance with your credit limit, presumably as an attempt to measure whether you have ever (in the time you have used the card) came close to maxxing it out. 

 

I am also open to the possibility that FICO has just miscommunicated here, by allowing a stray extra word ("high") to imply something they do not mean.  In fact, that's my guess as to what happened, though I am curious to hear if anyone knows for sure.  If so, they should definitely cut it and just say "balance." 

 

 

 

 


I thought it had no memory?

Message 9 of 45
Anonymous
Not applicable

Re: "high balance" and FICO 8

Hi SandiB.  The "high balance" field does indeed have a memory.  That's what it does: it remembers your highest balance.  In the last few years the CRAs have been including other fields that "remember" stuff, e.g. for each card the exact amount of your balance and of that exactly how much you paid -- on any particular month in the last couple years.

 

What you may be asking is: Hey, I thought FICO didn't use those "memory" fields in its models, even if the CRA is giving them the data to do it.  Revelate is claiming (and I am sure he's right) that the current and past FICO models do not use the High Balance field.  But the text as quoted says FICO 8 does.  So R and I think that they just worded that badly -- that they should cut the word "high" from the text.

 

It's worth observing that in future models FICO might well use some of the newer "memory" data -- not the High Balance field but the other richer month-by-month data to assess whether a person pays his balance in full or whether he sometimes (or often) carries a balance.  People who carry a balance are statistically a substantially greater risk, but FICO didn't have the data in the past to assess this about individuals.

 

 

Message 10 of 45
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