topic Re: How is utilization calculated? in Understanding FICO® Scoring

How is utilization calculated?

jamevfan — Sat, 19 Nov 2016 06:24:18 GMT

I have the cards below with the exception of conns added 3 months ago is utilization calculated overall and how does CLI factor in to that?

Re: How is utilization calculated?

Anonymous — Sat, 19 Nov 2016 06:35:58 GMT

Utilization is calculated per card based on the limit versus what is owed on statement balance. There is overall Utilization as well. They're both considered in your score but, for a CLI, that's really based on lender requirements. I don't see your cards as I am on mobile, though.

Re: How is utilization calculated?

jamevfan — Sat, 19 Nov 2016 06:42:46 GMT

Just trying to figure if im ok. My fico ssys im at 14% and i didnt know which calculation they are going by but it must be overall

Cap 1 secured 270 of 500 limit

Cap 1 QS1 680 of 2000

Conns 0 of 4000

Amazon 200 of 6000

Victoria secret 0 of 250

Macys 300 of 800

Kohls 150 of 300

Firestone 80 of 800

Fingerhut 0 of 1700

Kays 0 of 1600

Walmart 500 of 4000

Re: How is utilization calculated?

Anonymous — Sat, 19 Nov 2016 06:44:55 GMT

Yes, overall.

Re: How is utilization calculated?

Anonymous — Sat, 19 Nov 2016 06:47:02 GMT

Buy my calculations on those balanced is 10%. Are those your current or your statement from last report?

Re: How is utilization calculated?

jamevfan — Sat, 19 Nov 2016 06:49:27 GMT

Synchrony just increased my limits on 3 cards this evening

Walmart from 1100 to 4000

Conns from 2000 to 4000

Amazon from 4000 to 6000

Their calculation was before the CLI

Re: How is utilization calculated?

Anonymous — Sat, 19 Nov 2016 06:52:27 GMT

That could be it. Too lazy to recalculate lol.

Re: How is utilization calculated?

jamevfan — Sat, 19 Nov 2016 07:02:14 GMT

Possibly but thanks for doing it.

Re: How is utilization calculated?

austinguy907 — Sat, 19 Nov 2016 08:22:14 GMT

There's some debate about how to approach this subject but, I find it best to base utilization off of each account instead of taking the overall approach that some sites come up with when looking at scoring.

Next up would be the kind of company you're keeping with all of these retail cards. Think more Quality over Quantity and you'll start seeing some better limits. I'm guessing these are recent aquisitions as well?

What kind of plans do you have in the next 1/2/3 years? I see you have your tri-pull scores listed in your signature so it's safe to assume you have a mortgage at this point.

Re: How is utilization calculated?

SouthJamaica — Sat, 19 Nov 2016 13:34:42 GMT

@jamevfan wrote:
I have the cards below with the exception of conns added 3 months ago is utilization calculated overall and how does CLI factor in to that?

1. For FICO scoring purposes both overall revolving utilization and per-card revolving utilization are factored in. I.e. you can have overall low utilization, yet lose some points for having one card with high utilization.

2. Utilization is almost always computed on the basis of your statement balance.

3. CLI decisions do not directly use the utilization calculation mentioned above; they do, however, take into account internal utilization figures. E.g., Barclays issued some blog posts indicating that people whose daily balances are very low or zero, and people whose daily balances are very high, are both less likely to get CLI's, than people who are using their Barclays card significantly but not too much. They don't give you the numbers, but I'm guessing the sweet spot was in the 10-30% range. They do not care what your balance is on the statement date. It's the daily balances that interest them because that shows, in their view, both profitability and possible danger, in the card relationship.

Re: How is utilization calculated?

jamevfan — Sat, 19 Nov 2016 15:34:46 GMT

SouthJamaica thanks for your reply, i pulled my tri when applying for a new build back in Sept. We and in the process and will hopefully be finished around Feb/March if all goes well. I was asking about utilization to determine if i need to pay down to make my middle score increase or if i will benefit for the new limits. After we close i plan on keeping walmart, macys, definitely my amazon and Victoria secret and getting rid of kays, maybe kohls, and definitely fingerhut and try to obtain at least 2 prime cards while closing my capital one secured, its a big plan and i dont know how im going to go about it with minimal impact on my score but i have time to figure that out after closing

Re: How is utilization calculated?

SouthJamaica — Sat, 19 Nov 2016 17:13:48 GMT

@jamevfan wrote:
SouthJamaica thanks for your reply, i pulled my tri when applying for a new build back in Sept. We and in the process and will hopefully be finished around Feb/March if all goes well. I was asking about utilization to determine if i need to pay down to make my middle score increase or if i will benefit for the new limits. After we close i plan on keeping walmart, macys, definitely my amazon and Victoria secret and getting rid of kays, maybe kohls, and definitely fingerhut and try to obtain at least 2 prime cards while closing my capital one secured, its a big plan and i dont know how im going to go about it with minimal impact on my score but i have time to figure that out after closing

Overall utilization, and per-card utilization on the cards which received CLI's, will benefit from the new limits, but if I were you I would pay things down to maximize my scores prior to the closing.

Re: How is utilization calculated?

jamevfan — Sat, 19 Nov 2016 17:27:14 GMT

Thats my goal with my highest limits at least on my QS1 card and then my Walmart card but they are not as high as they could be I hate not shopping for Christmas but it will pay off in the long run.

Re: How is utilization calculated?

Anonymous — Sat, 19 Nov 2016 17:50:40 GMT

Listen to SouthJ. He can help.

As I am sure he'll explain, you need to:

create a lot of $0 balances (but leave one card reporting at least $5)

lower the individual utilization on each card (SJ recommends < 29%)

lower your total utilization to < 9%

That will help you maximize your score.

He may also ask you if you have an open installment loan. If you do not, he can suggest a technique that will raise your EX mortgage score.

Re: How is utilization calculated?

jamevfan — Sat, 19 Nov 2016 17:59:47 GMT

Thanks and that was my plan but with what we are having save and the budjet I have each pay period to pay down untilization we wont be able to pay evrything off unless we go into the saving we currently have for the house which will throw off what we are trying to save and it also seems the bureaus are at least a month behind in reporting the correct balances so if we are going to close in late feb early march I have to have this all done by Jan just to see the results and Im not sure where to start.......

Re: How is utilization calculated?

Anonymous — Sat, 19 Nov 2016 18:18:59 GMT

OK. You can ignore total utilization, because that will take care of itself and because you have a limited amount of money for paying down CC debt anyway. Here would be the priorities I would recommend.

(1) Pay off the Cap1 Secured and the Kohls completely. This is will create two $0 balances and will also bring all your cards to under < 49%. That will help.

(2) Pay off as many of the little balance cards as you can. This will create more $0 balances.

(3) Pay down any cards that are above 29% utilization. You may not be able to get them all paid down in time but do your best.

There are two reason to have many cards with $0 balances.

(a) It helps your score.

(b) When the mortgage lender calculates something called your DTI (debt to income ratio), none of those cards will have a minimum payment due. That will lower your DTI. DTI is not part of your FICO score but mortgage lenders care a lot about it.

PS. As you pay off each card, be certain not to use it again until after you own your house.

Re: How is utilization calculated?

jamevfan — Sat, 19 Nov 2016 20:28:10 GMT

Awesome! You gave me the direction needed for my cards so i will tackle those in this matter but i was thinking i needed to tackle the highest bal fist but will.pay off the cards with the lowest bal first and proceed to pay off the high card last. Great strategy and thanks for chiming in on this

Re: How is utilization calculated?

SouthJamaica — Sun, 20 Nov 2016 01:44:37 GMT

@Anonymous wrote:
OK. You can ignore total utilization, because that will take care of itself and because you have a limited amount of money for paying down CC debt anyway. Here would be the priorities I would recommend.

(1) Pay off the Cap1 Secured and the Kohls completely. This is will create two $0 balances and will also bring all your cards to under < 49%. That will help.

(2) Pay off as many of the little balance cards as you can. This will create more $0 balances.

(3) Pay down any cards that are above 29% utilization. You may not be able to get them all paid down in time but do your best.

There are two reason to have many cards with $0 balances.

(a) It helps your score.

(b) When the mortgage lender calculates something called your DTI (debt to income ratio), none of those cards will have a minimum payment due. That will lower your DTI. DTI is not part of your FICO score but mortgage lenders care a lot about it.

PS. As you pay off each card, be certain not to use it again until after you own your house.