topic Re: credit utilization question in Credit Cards

credit utilization question

Anonymous — Fri, 20 Jul 2012 13:07:22 GMT

so when they say don't go over 10 percent credit utilization does that mean per card or all together. For instance if 1 of my cards has a 25 percent credit utilization but the other ones are at 2 percent and I'm still under the 10 percent threshold totally is that what matters our is it per card?

Re: credit utilization question

pizzadude — Fri, 20 Jul 2012 13:58:17 GMT

@Anonymous wrote:
so when they say don't go over 10 percent credit utilization does that mean per card or all together. For instance if 1 of my cards has a 25 percent credit utilization but the other ones are at 2 percent and I'm still under the 10 percent threshold totally is that what matters our is it per card?

The best starting point for optimizing your revolving utilization is to let one card report a small balance ( less than 9% ), while the other cards report a zero balance.

That would be 9% utilization of the CL for that particular card.

Re: credit utilization question

SwiftTone — Fri, 20 Jul 2012 14:08:13 GMT

@pizzadude wrote:
@Anonymous wrote:
so when they say don't go over 10 percent credit utilization does that mean per card or all together. For instance if 1 of my cards has a 25 percent credit utilization but the other ones are at 2 percent and I'm still under the 10 percent threshold totally is that what matters our is it per card?
The best starting point for optimizing your revolving utilization is to let one card report a small balance ( less than 9% ), while the other cards report a zero balance.

That would be 9% utilization of the CL for that particular card.

REALLY?! I thought it was just <9% of your overall CL

Re: credit utilization question

pizzadude — Fri, 20 Jul 2012 14:33:48 GMT

@SwiftTone wrote:

That would be 9% utilization of the CL for that particular card.
REALLY?! I thought it was just <9% of your overall CL

You're better off having the card with a balance showing <9% utilization since FICO scores both your total combined utilization and your individual card utilizations.

Re: credit utilization question

MarineVietVet — Fri, 20 Jul 2012 14:46:10 GMT

@pizzadude wrote:

You're better off having the card with a balance showing <9% utilization since FICO scores both your total combined utilization and your individual card utilizations.

Plus FICO looks at the number of accounts reporting balances at the same time. So having fewer balances has a positive impact on scoring.

Re: credit utilization question

SwiftTone — Fri, 20 Jul 2012 17:51:08 GMT

So if I have accounts with CLs of: $4000, $4000, $1250, and $1000. If I only let one of the $4000 cards report a $200/5% balance, then my overal utilization is 2%. This is the ideal?

Re: credit utilization question

pizzadude — Fri, 20 Jul 2012 18:00:26 GMT

@SwiftTone wrote:
So if I have accounts with CLs of: $4000, $4000, $1250, and $1000. If I only let one of the $4000 cards report a $200/5% balance, then my overal utilization is 2%. This is the ideal?

It is the recommended starting point for optimizing your revolving utilization. Once card with a balance less than 9% utilization. You can experiment by allowing a slightly higher or lower balance to report.

Re: credit utilization question

SwiftTone — Fri, 20 Jul 2012 18:06:36 GMT

@pizzadude wrote:
@SwiftTone wrote:
So if I have accounts with CLs of: $4000, $4000, $1250, and $1000. If I only let one of the $4000 cards report a $200/5% balance, then my overal utilization is 2%. This is the ideal?
It is the recommended starting point for optimizing your revolving utilization. Once card with a balance less than 9% utilization. You can experiment by allowing a slightly higher or lower balance to report.

But do I have the general idea? Keep one card utilization under 9% and total utilization under 9% as well. All other cards should be a 0%

Re: credit utilization question

OhioCPA — Fri, 20 Jul 2012 18:09:23 GMT

Yes, you have the idea.

If one card is at 9%, and all other cards are 0%, your overall Utilization will be less than 9%.

Re: credit utilization question

Anonymous — Fri, 20 Jul 2012 18:43:42 GMT

well heres my situation. last month 9% reported on eq fico i let a small balance report on 2 cards and the rest 0 (i have 4 cc accounts) now this month i pretty much maxed out a small cl card and let the rest report zero 6% reported and eq fico went up 9 pts.

Re: credit utilization question

MarineVietVet — Fri, 20 Jul 2012 20:07:32 GMT

@SwiftTone wrote:
So if I have accounts with CLs of: $4000, $4000, $1250, and $1000. If I only let one of the $4000 cards report a $200/5% balance, then my overal utilization is 2%. This is the ideal?

Everyone's situation is different and there is no one size fits all approach to this and therefore no one single ideal utilization but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.

Re: credit utilization question

Anonymous — Fri, 20 Jul 2012 22:30:10 GMT

@MarineVietVet wrote:
@SwiftTone wrote:
So if I have accounts with CLs of: $4000, $4000, $1250, and $1000. If I only let one of the $4000 cards report a $200/5% balance, then my overal utilization is 2%. This is the ideal?
Everyone's situation is different and there is no one size fits all approach to this and therefore no one single ideal utilization but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.

No one says it better than MVV.

Re: credit utilization question

Revelate — Sat, 21 Jul 2012 00:28:57 GMT

@Anonymous wrote:
well heres my situation. last month 9% reported on eq fico i let a small balance report on 2 cards and the rest 0 (i have 4 cc accounts) now this month i pretty much maxed out a small cl card and let the rest report zero 6% reported and eq fico went up 9 pts.

As MVV said, it's individual to each consumer.

It's only one part of the equation regardless and therefore can't be accurately quantified. My score continued to go up as I went from 27% to 49% to 61% utilization month over month... and that last month was up by more than 10 points. This is a statistical outlier from being a near thin file and having various tradeline tick over a seasoning boundary (six months in this case) which offset the aggregate loss of points from a crappy revolving utilization.

The interesting thing will be this month for me, as I reported two zeros, and 60/2000 with nothing really occurring except one more payment entry on each of my 5 tradelines (auto + installment loan and everything age 7-9 months) so I'll get a pretty clean depiction for my current credit history, how much revolving utilization was depressing the score.

Personally I think it's all a bit bunk when we're talking in the margins of the algorithm: tweaking FICO for an extra 1-3 points by experimenting with 4% vs 3% utillization is usually pretty meaningless statistically; however, in the case that it ticks you over a tier boundary from some lender, I suppose that's the difference of a boatload of cash (though one might theoretically refi later).