topic Re: Question on letting $2 report... in Understanding FICO® Scoring

Question on letting $2 report...

My_Fako — Mon, 30 Nov 2015 17:29:18 GMT

Hey,

Anyone know if it matters... If you let $2 dollars report on a Major or Store? ( optimal utilization)

Thanks

Re: Question on letting $2 report...

Anonymous — Mon, 30 Nov 2015 20:25:56 GMT

Bumping your question to ask clarifying question.

Are all your other cards at 0%? Also are you doing this for a particular reason? I played around with my utilization because I'm preparing for a mortgage in less than 6 months. I had 7 cards and 6 of them were reporting at 0 the other is reporting less than 1 percent. I gained a few points by doing this, but I do not think it has to be 2 dollars just anything that keeps you under 1%

Re: Question on letting $2 report...

My_Fako — Mon, 30 Nov 2015 19:16:42 GMT

Yes getting ready to pay account's. All to $0 but one. I just wasn't sure if it had to be a Major reporting 1% OR it could be a store card. If this makes sense...

Re: Question on letting $2 report...

gdale6 — Mon, 30 Nov 2015 21:09:55 GMT

Anything amount reporting below 1% is rounded to 1% so a 2 bal should suffice for usage on 1 card. Matters not if store or bankcard.

Re: Question on letting $2 report...

Anonymous — Mon, 30 Nov 2015 21:18:33 GMT

Yes, makes perfect sense. To my knowledge, it doesn't matter if it's a department store or a major CC that is reporting a balance as far as utilization is concerned. I tend to only use a major, but that's becausei i'm usually taking advantage of a 0 % financing offer. Hopefully others will chime in.

Re: Question on letting $2 report...

Bay_Area_Joe — Tue, 01 Dec 2015 03:41:38 GMT

There has been a lot of talk about this.

I know for my file, having exactly $ 2.00 balance report on 1 card, all others report 0.

That achieved the best score for me. I gained 11 points. I am now at 808 on MyFico Experian.

Re: Question on letting $2 report...

AzaleaB — Tue, 01 Dec 2015 05:09:16 GMT

@Bay_Area_Joe wrote:
There has been a lot of talk about this.

I know for my file, having exactly $ 2.00 balance report on 1 card, all others report 0.

That achieved the best score for me. I gained 11 points. I am now at 808 on MyFico Experian.

J

So does your score drop if you report $3 or $5 or $10? I know this $2 thing is mentioned on CB but don't get it.

Re: Question on letting $2 report...

takeshi74 — Tue, 01 Dec 2015 21:01:26 GMT

Best way to answer is to test and see. Everyone's credit profile isn't identical and neither is impact.

Re: Question on letting $2 report...

DU556 — Wed, 02 Dec 2015 12:01:11 GMT

OP, i hope you don't mind me thread jacking right not but my question is related to small balances reporting and causing fluctuations.

There have been several times where I'm reporting between 3-5% which translates to about $60 and i make a $40 purchase causing my balance % to increase by "over 50". When this happens, i lose points because my debt as increased but it doesn't make sense. The limit on that card was around $5k so i don't understand why these fluctuations occur.

If you leave a $2 balance and make a $10 purchase, you still have to be careful because your % of debt has increased by over 300-500%. Or what ever the number might be

Re: Question on letting $2 report...

NRB525 — Wed, 02 Dec 2015 13:41:10 GMT

@DU556 wrote:
OP, i hope you don't mind me thread jacking right not but my question is related to small balances reporting and causing fluctuations.

There have been several times where I'm reporting between 3-5% which translates to about $60 and i make a $40 purchase causing my balance % to increase by "over 50". When this happens, i lose points because my debt as increased but it doesn't make sense. The limit on that card was around $5k so i don't understand why these fluctuations occur.

If you leave a $2 balance and make a $10 purchase, you still have to be careful because your % of debt has increased by over 300-500%. Or what ever the number might be

No, I don't think this is a measure within FICO. The absolute dollar change amount is used in certain aspects of the algorithm, but a change from $2 to $10 on the same revolver would be virtually ignored. That 5x change to $10 would use the change to $10, not the 5x factor, and the change to $10 is not enough of a dollar change.

Now, if you went from $2,000 to $10,000 on the card, THAT would get the attention of the algorithm, but because of the $8,000 increase, not because of any 5x factor of the debt amount.

Re: Question on letting $2 report...

NRB525 — Wed, 02 Dec 2015 14:10:06 GMT

@My_Fako wrote:
Yes getting ready to pay account's. All to $0 but one. I just wasn't sure if it had to be a Major reporting 1% OR it could be a store card. If this makes sense...

It probably doesn't make a difference on one month set of reports. However the challenge with a store card is, you need to shop there every month to keep refreshing the new balance, so you can continue to have a small balance to manage to.

Using a regular credit card, you shop anywhere to keep the balance available to report.

If you use the store card, and decide later you want to use another card, you likely have a transition problem to get from a store card reporting to another store card reporting or a regular bank credit card reporting. (This presumes that the word "problem" is understood for what it is, a minor issue). If in that transition you end up with the first store card paid off before the next card reports, then all cards are at zero and the score drops some larger number of points. Score will recover once cards start coming back on line, but for those who are obsessive enough to want only one reporting, a store card is the most challenging to do this with.

Re: Question on letting $2 report...

Thomas_Thumb — Wed, 02 Dec 2015 14:54:22 GMT

If transitioning to another card, I would error toward having a balance report on 2 cards as opposed to zero cards. Either way, impact on score due to an overlap or gap is fleeting.

P.S. OP - not sure how many accounts you have but I would suggest you do some testing yourself to see how your file scores with one card reporting a small balance and then with two cards reporting small balances. Results do vary significantly by profile. By small balance, I mean under 5% of the card's CL (not a fixed $2).

Re: Question on letting $2 report...

DU556 — Wed, 02 Dec 2015 23:36:15 GMT

Look at these notifications when my balances changes even though they were way below 1% of the card's limit. I don't understand why i lost points with dollar amounts being so low. In this first example, I lost 7 point when my balance increase from $0 to $132 on a card with $5.8k limit

In this next example, my balance increase from $0 to $23 and i lost 6 points. To me it does seem small dollar amounts harm your score. What do you think?

Re: Question on letting $2 report...

Thomas_Thumb — Fri, 04 Dec 2015 12:42:37 GMT

A reported card utilization of 2.2%, per your 1st example, is not sufficient for any points deduct associated with a high utilization. The statement is just an event notification. The key point in both your examples appears to be a change in card status of not reporting => reporting a balance.

Fico has a scoring metric that looks at the # of open accounts reporting a balance. This is a count metric - independent of utilization. For count the balance could be $2 or $2,000, makes no difference - count is count. If the # cards reporting a balance increases, that often drops score. A 5 point to 8 point drop is typical when a count threshold is crossed. Thresholds are profile dependent. For example, if you have 3 to 5 cards, some porfiles report score changes going from 1 => 2 and 2 => 3. Others only see a change at 2 => 3.

Key point: The models are also looking for indications you are using credit. Basically, a single card reporting satisfies this metric. If no cards report any balance, then score can drop quite a bit (20 to 35 points is typical). A score drop for zero cards reporting appears to be universal across all profile types.

Re: Question on letting $2 report...

NRB525 — Fri, 04 Dec 2015 14:35:28 GMT

@DU556 wrote:
Look at these notifications when my balances changes even though they were way below 1% of the card's limit. I don't understand why i lost points with dollar amounts being so low. In this first example, I lost 7 point when my balance increase from $0 to $132 on a card with $5.8k limit

In this next example, my balance increase from $0 to $23 and i lost 6 points. To me it does seem small dollar amounts harm your score. What do you think?

As TT notes, these are not "balance change" notifications they are "card was zero, now has any balance" changes. There's a difference between the two.

With "card was zero, now has any balance", as you see, any balance is sufficient to trigger that point change, even two dollars.

If you let each of these cards change, increase, by the same amount the next month, there should be zero change in score for that small of a balance change, because the card is actually now consistently reporting some balance, it's not zero at the start of the comparison. Only if you got to a large absolute dollar amount change, and / or reached some higher utilization threshhold like 50% of the card CL would you see another points change in EQ.