topic Re: Explain 9% uti for optimal FICO in Credit Cards

Explain 9% uti for optimal FICO

CC40 — Sat, 11 Aug 2012 03:36:47 GMT

I need a better understanding of the credit card affects on FICO scoring. I have a CC that I just paid down from 67% uti to 9%. I did not pay the remaining balance yet. The CL is $2100 - reported balance was $189.00. I have the used the card for minor purchases with plans to pay again this month. Do I need to only pay for the purchases and carry the $189 balance to keep the optimal FICO?

I have read these threads about how to "play the game," but I don't quite get it yet. Can someone help me explainn?

Re: Explain 9% uti for optimal FICO

cardslayer — Sat, 11 Aug 2012 03:42:47 GMT

There is no game. Pay off your card, and avoid interest.

Re: Explain 9% uti for optimal FICO

CC40 — Sat, 11 Aug 2012 03:48:22 GMT

There is a certain skill to the optimal score. I do know that. I was actually advised NOT to pay the card in full - at least until it reported - in order to get optimal FICO increases. That is the information I am seeking.

Re: Explain 9% uti for optimal FICO

creditnocash — Sat, 11 Aug 2012 05:08:11 GMT

What are your cards? Balances?

To get optimal fico score you are playing the game of utilization.

Pay off all your cards except one. And keep it 1-9 percent of your total credit available.

For example.

My credit limit reporting is 8100 so I need to keep it 1-729 reported on one card.

From what ive read 7% gets you the most score for your balance. (get it bang for buck)

Re: Explain 9% uti for optimal FICO

bichonmom — Sat, 11 Aug 2012 05:19:06 GMT

For the highest FICO, have all of your CCs report a zero balance, except one reporting a bal <9% of that card's CL.

You can use the other CCs as much as you want during the month. Just PIF *before* the statement cuts and be sure not to use the card for a few days, so that nothing new posts between your payment and the statement cutting.

Just as an example, I missed a couple of payments before the statement cut this last month because of a hectic schedule. One CC reported a $12 balance on a $2500 CL and my FICO dropped 10 points. A second one just reported $190 bal on $3000 CL and it dropped another 6 points. As you can see, these are very small balances on decent CLs, and yet my FICO was affected by 16 points total for the 2 cards. Of course, next month, the score should bounce back after they report a zero balance again. If the balances were higher, the FICO drop would have been even greater.

Re: Explain 9% uti for optimal FICO

Anonymous — Sat, 11 Aug 2012 06:21:49 GMT

@bichonmom wrote:
For the highest FICO, have all of your CCs report a zero balance, except one reporting a bal <9% of that card's CL.

You can use the other CCs as much as you want during the month. Just PIF *before* the statement cuts and be sure not to use the card for a few days, so that nothing new posts between your payment and the statement cutting.

Just as an example, I missed a couple of payments before the statement cut this last month because of a hectic schedule. One CC reported a $12 balance on a $2500 CL and my FICO dropped 10 points. A second one just reported $190 bal on $3000 CL and it dropped another 6 points. As you can see, these are very small balances on decent CLs, and yet my FICO was affected by 16 points total for the 2 cards. Of course, next month, the score should bounce back after they report a zero balance again. If the balances were higher, the FICO drop would have been even greater.

Cannot agree more with you. +1+1+1+1

Same happened to me 2 months ago. I only had 4 cards and my CapOne reported 7 dollars making it 2 cards with balances and 2 with 0 util. My score dropped 14 points.
Util was 11% I think at that time.

Re: Explain 9% uti for optimal FICO

Anonymous — Sat, 11 Aug 2012 06:29:40 GMT

I also want more information on this subject. I have 3 cards and all are reporting balnces below 10%. Should i keep balances on only one and payoff rest? Fromthe replies of this thread it looks better to use only one card and keep other cards in locker unless required.

Re: Explain 9% uti for optimal FICO

Anonymous — Sat, 11 Aug 2012 06:48:03 GMT

I'm on iPad so I wI'll try and keep thiS short. Util is calculated on reported balance. Reported balance usually happens once a month. Most common report date is around your statement date. Use your card as much as you want, but pay what you need to so payment hits just before statement date to whatever you want reported balance. Not all cards report on statement date and cards don't always just report once a month. This is where paying attention to how your cards report come in as well as research. 1-9% util of both one card and total utilization with the rest of your cards reporting 0 balance is ideal for highest fico.

Re: Explain 9% uti for optimal FICO

Anonymous — Sat, 11 Aug 2012 11:56:14 GMT

Hi there.

Would this also work out with a two credit cards (BofA secured 99/500 and Discover More) and one charge card (Zync) configuration?

I am thinking of paying the two credit cards in full before statement date and putting enough on the Zync to get to a 1-9% overall util rate.

Re: Explain 9% uti for optimal FICO

HenryJumbo — Sat, 11 Aug 2012 12:06:51 GMT

@Anonymous wrote:
I'm on iPad so I wI'll try and keep thiS short. Util is calculated on reported balance. Reported balance usually happens once a month. Most common report date is around your statement date. Use your card as much as you want, but pay what you need to so payment hits just before statement date to whatever you want reported balance. Not all cards report on statement date and cards don't always just report once a month. This is where paying attention to how your cards report come in as well as research. 1-9% util of both one card and total utilization with the rest of your cards reporting 0 balance is ideal for highest fico.

I have two cards, so keeping one reporting zero balance and the other reporting a balance would be the best way to boost your FICO score?

Example 10% of my first card $2,000 = $200, and 10% of my second card is $240. Add both CLs gives me $4,400 and 10% of that is $440, the same amount if you only have a 10% balance on each card individually (isn't it better to have a balance across cards?). Where does having a zero come into play? Wouldn't the company report your zero balances which from what I read is not bad but not good either.

So far I see two schools of thought, the people who never want to carry any outstanding balances reported and they payoff and push payments before the statement cut off date. And now I see the only keep one or half of your cards with a zero balance people. where do you get your information? Or is this all just theory.

Re: Explain 9% uti for optimal FICO

Cdnewmanpac — Sat, 11 Aug 2012 14:14:20 GMT

1. To be clear, the people recommending a utilization of 1-9% are NOT suggesting CARRYING a balance. They are talking about allowing a balance to post on your statement. Carrying a balance (while sometimes appropriate for an individual) does not boost your FICO score.

2. From a scoring standpoint, FICO typically penalizes you for having more than one card reporting a balance.

3. While there is strong evidence that having a small balance reporting on one card leads to a higher score than having all cards report zero balance, this is mostly derived from reports from people with good to excellent credit. This may only apply to certain fico "buckets". Personally, I just had a new card report with a utilization >50% and my score didn't change. I then had another card accidentally report an $88 balance (on a 16k limit) and again, no change in score. I suspect this is because I have hit the max score allowed for my bucket (I have some charge-offs from 2006) and such minor factors as 0 vs 5% utilization are being overwhelmed by the larger penalty for serious delinquencies. However, when my score was closer to 650, I would notice a change of a few points when I allowed one card to report a balance of 8%. My only point with this is that nothing is certain in FICO scoring.

4. Scoring from utilization doesn't carry forward. The only time utilization matters is when you are applying for credit. If you have no intention of applying for something this month, then stressing about zero vs nine vs five is a waste. While letting balances drift north of 80% may make your creditors nervous if they soft pull you, minor fluctuations in score don't matter most of the time.

Re: Explain 9% uti for optimal FICO

happyhome40 — Sat, 11 Aug 2012 16:26:19 GMT

The problem I have is, I have multiple cards that I use for different reasons (points,Cashback,etc) and the statement dates are all different. What is the best way to juggle multiple card use and optimize Fico score. I've noticed that since I'm using multiple cards to cover different things, and with different statement dates,a balance is always reporting on one card when the one due is reporting zero. Any ideas?

Monica

Re: Explain 9% uti for optimal FICO

jamie123 — Sat, 11 Aug 2012 18:49:08 GMT

The ONLY time you really need to do this is if you are applying for NEW credit in the next month or if you are interested in seeing how high you can tweek your scores.

It becomes a part time hobby and quite a lot of work and juggling to do this ALL the time.

Here is how you do it:

You designate one CC as your reporting CC that will report less than 9% of the grand total of all your CC credit lines. (Add all your CC credit lines together and muliply by .09, this will be the number you CANNOT exceed each month.)(Example: $1000 + $2000 + $300 + $700 = $4000 then $4000 X .09 = $360 )(In this example you CANNOT exceed $360 reporting on one CC)

Pay your ZERO balance cards off in full a day or two BEFORE each cards due date. After you make this payment you CANNOT use this card until it reports a zero balance to the CRAs. This will USUALLY occur within 4 days AFTER the due date.

When it comes time to pay your reporting card you do the same thing except you leave a balance that is less than 9% of overall CC credit lines. To prevent paying interest on this card you might want to make two payments per month on this card. Once it reports the less than 9% UTI, go back and pay the balance down to zero.

Some people are amazed at just how many points you can pick-up this way instead of having even minor small balances reporting on several cards. If your current reporting UTI is above 10% and spread over 50% of your cards it will make a really big difference in your scores.

Hope this explanation was clear enough.

Any questions?

Re: Explain 9% uti for optimal FICO

Anonymous — Sat, 11 Aug 2012 19:08:40 GMT

Due date? What due date? As in the day the statement closes right

Re: Explain 9% uti for optimal FICO

cashnocredit — Sat, 11 Aug 2012 19:12:51 GMT

A year or so ago I was transitioning between a thin file (2 CCs) with baddies and a larger clean one (4 CCs) . Throughout this I experimented with fine tuning EQ FICO optimization. What I found was consistent wiht what's reported here except that the highest FICO scores were when I had a balance reporting on a single card and that balance was between 1 and 4% of its CL. At 5% I saw a 3 point drop when I had old CAs reporting and a 5 point drop with a clean file.

These are pretty small changes but if I was going for a mortgage I would pull out all the stops and, to make sure my cards were active locs, make sure I was reporting a balance at least every other month on all my cards and, just before apping, report a small ( <4% ) balance on a single CC.

Re: Explain 9% uti for optimal FICO

Anonymous — Sat, 11 Aug 2012 19:13:33 GMT

Yes correct me if I'm wrong but...

First date is the due date when the month closes and your statement comes out.

After 4 days, the balance is reported to the CRAs?

Then after a week or so, your payment for that month is due. You do not want to pass this date without paying the full balance or else interest will consume you right?

Re: Explain 9% uti for optimal FICO

cashnocredit — Sat, 11 Aug 2012 19:18:12 GMT

@Anonymous wrote:
Due date? What due date? As in the day the statement closes right

The reason to pay just before the due date (Date payment is due is printed on your statement) is that it allows you to use the card till then and pay the current balance in full or leaving a small remaining balance for the one card you select while minimizing the time you shouldn't use the card before the next statement cuts a few days to a week later.

Re: Explain 9% uti for optimal FICO

cashnocredit — Sat, 11 Aug 2012 19:20:41 GMT

@Anonymous wrote:
Yes correct me if I'm wrong but...

First date is the due date when the month closes and your statement comes out.
After 4 days, the balance is reported to the CRAs?
Then after a week or so, your payment for that month is due. You do not want to pass this date without paying the full balance or else interest will consume you right?

The goal is always to PIF so no interest accrues in any case. Additionaly, to tune your FICO, you want to prepay all but one of your CCs current balances which will reflect the additional amount you have charged beyond the prior statement's balance..

Re: Explain 9% uti for optimal FICO

jamie123 — Sat, 11 Aug 2012 19:45:27 GMT

Alright I'll explain a little more.

Payment Due Date: This is the date printed on the bottom of your statement informing you by which date you must make at least the minimum payment.

Reporting Date: This is when the creditor reports your payment and balance to the CRAs. This USUALLY happens 3 to 4 days AFTER the payment due date.

Statement Date: The day that a new statement is generated for the next month. This USUALLY happens 3 to 4 days AFTER the payment due date and is USUALLY the same as the reporting date.

It kind of looks like this:

Payment Due Date August 10, 2012 >>>>>>>>>>>>>>3 to 4 days pass>>>>>>>>>>>>>>>>>>Reporting Date and Statement Date.

Then next month:

Payment Due Date September 10, 2012 >>>>>>>>>>>3 to 4 days pass>>>>>>>>>>>>>>>>>>Reporting Date and Statement Date.

Re: Explain 9% uti for optimal FICO

Anonymous — Sat, 11 Aug 2012 20:52:11 GMT

@jamie123 wrote:
The ONLY time you really need to do this is if you are applying for NEW credit in the next month or if you are interested in seeing how high you can tweek your scores.

It becomes a part time hobby and quite a lot of work and juggling to do this ALL the time.

Here is how you do it:

You designate one CC as your reporting CC that will report less than 9% of the grand total of all your CC credit lines. (Add all your CC credit lines together and muliply by .09, this will be the number you CANNOT exceed each month.)(Example: $1000 + $2000 + $300 + $700 = $4000 then $4000 X .09 = $360 )(In this example you CANNOT exceed $360 reporting on one CC)

Pay your ZERO balance cards off in full a day or two BEFORE each cards due date. After you make this payment you CANNOT use this card until it reports a zero balance to the CRAs. This will USUALLY occur within 4 days AFTER the due date.

When it comes time to pay your reporting card you do the same thing except you leave a balance that is less than 9% of overall CC credit lines. To prevent paying interest on this card you might want to make two payments per month on this card. Once it reports the less than 9% UTI, go back and pay the balance down to zero.

Some people are amazed at just how many points you can pick-up this way instead of having even minor small balances reporting on several cards. If your current reporting UTI is above 10% and spread over 50% of your cards it will make a really big difference in your scores.

Hope this explanation was clear enough.

Any questions?

very useful informatin.

One question, can we keep reporting balance of 9% of highest limit cc? I am just afraid of keeping 360 balance on lowest limit card, e.g cc with 700. This will report 50% utilization on 700 cc. Rather i would like to keep balance of 180 on cc with limit 2000. Whats ur thougts?