Epic Contributor
Posts: 22,528
Registered: ‎03-19-2007
Re: How much does OTL account affect credit score

It appears as if the scoring of % util in FICO is not linear.  In English, that means that the same % increase from, say 80% to 90%, hurts more than the same 10% increase from, say 10% to 20%. 

Additionally, FICO scores both overall % util and the util of each card.  While the distribution amongst cards is averaged out in overall % util, that is not the case when looking at individ % util.  If you accept the premise that higher utils have proportionally more negative impact than the same interval at lower utils, the effect can be significant.

Thus, purely from a FICO perspective, one would concentrate on the highest % util cards.


However, from a financial perspective, paying down the highest APR cards would reap result of less $$ out of pocket.  Thus, two often-conflicting strategies.

Advice on which to pay first is dependent upon your individual need.... improve FICO score, or decrease interest expenditure.


That is apart from any manual review issues.  Creditors dont usually base their decisions only on a three digit number.  While paying down a high util card will remove the negative effect next month, balance history is also recorded in consumer files, and is available to creditors.   Seeing a lengthy period of very high balances vs CL may raise some concern.  And, of course, creditor keep their own history data, and extended periods of high util may trigger review of your current credit limit.