topic Re: What's your experience w/ bal and util for score increase? in Credit Cards

What's your experience w/ bal and util for score increase?

Anonymous — Wed, 04 Nov 2015 18:11:22 GMT

Hi,

I was just recently approved for two Amex cards which brings me to 3 cards total. I normally kept my util for the capital one 10% or below. Now that I have 3 cards I'm wondering whats the best method to get my score to continue increasing. Should I be using all 3 every month and just make sure I'm below 10% util before cycle closes and reports? Just wondering what's best...zero balance for two and one with balance, or all 3 with low util balances.

Also, for the PRG Amex, is it better to show alot of usage so higher limits would be available as time passes? I was told they look at my spending history on the card to know how much credit I should be needing in the future.

Let me know what's worked best for you, and any advice for me would be appreciated. I'd like these 3 cards to get me to the next level on all reports. Thanks.

Re: What's your experience w/ bal and util for score increase?

Atonswife — Wed, 04 Nov 2015 18:34:48 GMT

Let two cards report 0 and the 3rd let report 1-9%. Not sure about the PRG.

Re: What's your experience w/ bal and util for score increase?

Anonymous — Wed, 04 Nov 2015 18:40:53 GMT

I've heard for the best credit scoring, we should have all cards reporting a zero balance every month except for one, and that one card should only report 1% util. But I've noticed score increases whenever my overall util. gets down to 9% or less. However, I don't agree with micromanaging credit scores that way because I think it could have other consequences down the road. For example, if you constantly only report 1% util. and then need to make a large purchase that increases your util. significantly, it might cause your lenders to take a closer look at your accounts. That's just my opinion though, so however you choose to manage your credit is up to you.

Re: What's your experience w/ bal and util for score increase?

Thomas_Thumb — Wed, 04 Nov 2015 19:03:34 GMT

Having only one card report a balance is generally considered best.

However, reporting a balance that results in an aggregate utilization around 4% has been identified as "optimal" in some scoring models. The key factors are one card reporting and aggregate utilization. A single card UT of 20% to 30% is not necessarily harmful to score - if aggregate UT remains in "optimal range".

My read is having one card reporting a 15% card utilization with a resultant aggregate utilization of 4% would score as high as [perhaps higher than] one card reporting a balance of 4% that results in aggregate utilization of 1%.

Re: What's your experience w/ bal and util for score increase?

sreneesa — Wed, 04 Nov 2015 19:13:05 GMT

My utility for a while has been btwn 10-17 percent and my scores keep rising. I believe it is all individualized and you just have to keep track of what works for your individualized credit profile.

When I did have utilization under 10 percent I did not really see a big difference. Again, it just depends as my profile is different than yours and others.

Re: What's your experience w/ bal and util for score increase?

Anonymous — Wed, 04 Nov 2015 20:03:25 GMT

@Anonymous wrote:

Let me know what's worked best for you, and any advice for me would be appreciated.

There is no practical reason to have a tip-top credit score unless you plan to apply for credit/loan. But that doesn't mean you should go out and max out your credit cards (purchase beyond your means) and allow those figures to be reported to the credit bureaus since that may trigger red flags to your creditors and they may interpret that information that you are in financial distress.

Re: What's your experience w/ bal and util for score increase?

Anonymous — Wed, 04 Nov 2015 20:11:13 GMT

Thanks everyone for the feedback. It gives me insight as to different methods I can try and know what works for others. Hopefully more members will chime in so I can see more opinions.

Thomas_Thumb: I see the idea you're mentioning. Makes sense to me if one is a little higher but overall your util is low. Question is if the scoring systems see it that way.

JustMe3: I also don't want the stress of micromanaging. (like I'm doing now) but I figure once I'm comfortable with a method or way of maintaining, it'll be easy for me to just make it routine.

More than likely, I'll stick with one way until I hit a plateau. If I see it doesn't continue to improve, then it might make sense to bring in change.

Re: What's your experience w/ bal and util for score increase?

Anonymous — Wed, 04 Nov 2015 20:23:14 GMT

@Anonymous wrote:
@Anonymous wrote:

Let me know what's worked best for you, and any advice for me would be appreciated.
There is no practical reason to have a tip-top credit score unless you plan to apply for credit/loan. But that doesn't mean you should go out and max out your credit cards (purchase beyond your means) and allow those figures to be reported to the credit bureaus since that may trigger red flags to your creditors and they may interpret that information that you are in financial distress.

In a month, I'll be getting a loan of some sort as I need a vehicle. But overall, I'd like to keep my score as high as possible on a permanent basis. That way if any derogs appear from my past, (as some have), or if I do take a little hit on my score....for the most part..I'll still be in a good range with my score. I don't want to be sitting in the 700's where a bump pushes me to the 600's. I'd rather be in the 800's if possible...where a bad bump...I fall to the 700's. Besides...most of my life I've been in the 500-600's and it hasn't done me any good staying there. As hard as I've worked on my credit...I'd like to stay alert and conscious of my credit rating.

Yeah and I definitely won't be on a spending spree. I've learned to live within my means. May not be that exciting as others, but for now....I can deal with it just fine. I appreciate your insight

Re: What's your experience w/ bal and util for score increase?

Thomas_Thumb — Wed, 04 Nov 2015 22:34:19 GMT

@Anonymous wrote:
Thanks everyone for the feedback. It gives me insight as to different methods I can try and know what works for others. Hopefully more members will chime in so I can see more opinions.

Thomas_Thumb: I see the idea you're mentioning. Makes sense to me if one is a little higher but overall your util is low. Question is if the scoring systems see it that way.

JustMe3: I also don't want the stress of micromanaging. (like I'm doing now) but I figure once I'm comfortable with a method or way of maintaining, it'll be easy for me to just make it routine.

More than likely, I'll stick with one way until I hit a plateau. If I see it doesn't continue to improve, then it might make sense to bring in change.

Yes, the scoring models do allow for a specific card to report a reasonably high balance without "dinging" your score as long as overall utilization is kept "in range". I allow my aggregate utilization to float between 1% and 6% month to month - without change in any of my Fico scores. I also have personally reported balances on a specific card in excess of 30% without negatively impacting score [Note: aggregate UT still maintained under 6% in these situations].

There is plenty of data on various MyFico threads that validate UT% on a specific card can be well over 10% without negatively impacting score [again, need to maintain aggregate UT% in range]. Here is an example - in both cases assume AG UT is 6% and you have 3 cards - each with the same 3K credit line. [total spend = $540]

Case I : Card 1 = $540, card 2 = 0, card 3 = 0, UT on card 1 = 18%, AG UT = 6%

Case 2: Card 1 = $180, card 2 = $180, Card 3 = $180. Each card has 6% UT and AG UT = 6%

For typical profiles (like yours) actual data from other posters indicates Case 1 scores will be 10 to 20 points higher than case 2 scores. You are penalized for "too many open accounts showing a balance". This has been well documented and holds true for most profiles/situations. Conversely, here is no penalty in case 1 - because you are not using all your open accounts at once and because the relatively low 18% card UT is not a negative factor in scoring.

Now assume card 1 had a $6k CL and the other 2 cards are $1.5k each.

Reporting a UT = 18% on card 1 and no balance on cards 2 and 3 triggers a score drop. Why - because aggregate UT is now illustration is 12% - above the 9% generally accepted as a threshold for a score change trigger. The card UT = 18% is not the score change trigger.

Re: What's your experience w/ bal and util for score increase?

kdm31091 — Wed, 04 Nov 2015 22:29:23 GMT

Its generally not worth the effort to eek out a couple extra points unless you feel it will make a difference for an upcoming app. Micromanaging takes work and to me, my cards exist to be used. I refuse to not use them before statement cut because the util may report more than 1 percent etc. Those who optimize seem to enjoy it. I just think its a lot of effort for minimal gain. Good luck with whatever you decide.

Re: What's your experience w/ bal and util for score increase?

Thomas_Thumb — Wed, 04 Nov 2015 23:17:59 GMT

I agree with your approach. I let all cards report full balances and then pay each in full a few days before the due date. That way I get to maximize float on money. Been doing it that way over 30 years.

If you have aggregate CL in a good ratio to spending habits, aggregate UT% naturally falls in-line. Statements come, wait a few days, PIF, no worries. The key is getting CLs in balance on a per card basis and overall. Generally 5 to 8 cards are needed to achieve a balance with flexibility to absorb monthly spend variations.

However, others, such as the OP, want to "optimize" score so advise is geared toward what the OP is asking for. Of course, past history for utilization % and # cards reporting a balance are not considered in future scores so really no real value in using these optimizing tactics except perhaps prior to applying for new credit. Still, optimizing can help create discipline in credit management.

Re: What's your experience w/ bal and util for score increase?

Anonymous — Thu, 05 Nov 2015 00:27:06 GMT

@Thomas_Thumb wrote:
@Anonymous wrote:
Thanks everyone for the feedback. It gives me insight as to different methods I can try and know what works for others. Hopefully more members will chime in so I can see more opinions.

Thomas_Thumb: I see the idea you're mentioning. Makes sense to me if one is a little higher but overall your util is low. Question is if the scoring systems see it that way.

JustMe3: I also don't want the stress of micromanaging. (like I'm doing now) but I figure once I'm comfortable with a method or way of maintaining, it'll be easy for me to just make it routine.

More than likely, I'll stick with one way until I hit a plateau. If I see it doesn't continue to improve, then it might make sense to bring in change.
Yes, the scoring models do allow for a specific card to report a reasonably high balance without "dinging" your score as long as overall utilization is kept "in range". I allow my aggregate utilization to float between 1% and 6% month to month - without change in any of my Fico scores. I also have personally reported balances on a specific card in excess of 30% without negatively impacting score [Note: aggregate UT still maintained under 6% in these situations].

There is plenty of data on various MyFico threads that validate UT% on a specific card can be well over 10% without negatively impacting score [again, need to maintain aggregate UT% in range]. Here is an example - in both cases assume AG UT is 6% and you have 3 cards - each with the same 3K credit line. [total spend = $540]

Case I : Card 1 = $540, card 2 = 0, card 3 = 0, UT on card 1 = 18%, AG UT = 6%
Case 2: Card 1 = $180, card 2 = $180, Card 3 = $180. Each card has 6% UT and AG UT = 6%

For typical profiles (like yours) actual data from other posters indicates Case 1 scores will be 10 to 20 points higher than case 2 scores. You are penalized for "too many open accounts showing a balance". This has been well documented and holds true for most profiles/situations. Conversely, here is no penalty in case 1 - because you are not using all your open accounts at once and because the relatively low 18% card UT is not a negative factor in scoring.

Now assume card 1 had a $6k CL and the other 2 cards are $1.5k each.

Reporting a UT = 18% on card 1 and no balance on cards 2 and 3 triggers a score drop. Why - because aggregate UT is now illustration is 12% - above the 9% generally accepted as a threshold for a score change trigger. The card UT = 18% is not the score change trigger.

Thanks. This is the type of breakdown that can help me understand how it works out. I understood and followed all the way until that last paragraph. That last paragraph has me a little confused, but I imagine it's due to the last two cards having such a low credit limit. And i think it also has to do with what you mentioned in your next post about trying to get your cards balances in line. I dunno. I know I'll keep reading all these posts and yours until I have full clarity. I was good all the way until that last paragraph....so I think I get the gist of it. I appreciate the breakdown and examples. It helps alot.