topic Re: Utilization Reports in Understanding FICO® Scoring

Utilization Reports

Anonymous — Mon, 30 Oct 2017 01:35:22 GMT

Hi. I'm trying to keep my utilization below 30% when reported, but I'm confused on spending above 30% of my limit without it getting reported.

Example.

Statement is on the 2nd of each month. I spend 30% of my limit on the 1st and my statement due on the 2nd is 30% of my limit. They report to the credit bureaus on the 3rd. I don't spend anything on the credit card until the 10th and max out my credit line that day. I pay it down to below 30% on the 20th. I don't spend anything until my next statement and the next statement shows that I owe below 30% of my credit line.

Do the credit bureaus know that I spent up to my credit limit or do they only know that my utilization when reported was below 30%? Does it matter if I max out my credit card and pay it off before the billing cycle?

Re: Utilization Reports

Anonymous — Mon, 30 Oct 2017 01:42:40 GMT

Some lenders report to the highest usage field but it isn’t part of fico scoring.

Just let it report less than 28.9% and you’re good to go.

Re: Utilization Reports

Anonymous — Mon, 30 Oct 2017 01:47:15 GMT

That's what I thought, but I wanted to make sure. I've only had credit for a month and a half and definitely want to do everything I can to have it go up as fast as possible while also being able to use my credit limit if I need it.

Why below

@Anonymous wrote:
Some lenders report to the highest usage field but it isn’t part of fico scoring.

Just let it report less than 28.9% and you’re good to go.

28.9%?

Re: Utilization Reports

Anonymous — Mon, 30 Oct 2017 01:51:54 GMT

Breakpoints are never at x0% but at x9% but fico rounds up.

So aim for 28.9% instead of 30%.

Also see my 11 rules link in signature!

Re: Utilization Reports

HeavenOhio — Mon, 30 Oct 2017 01:52:16 GMT

"Below 30%" means 29% or below. And 29.0000001% rounds up to 30%. That makes 28.9% or below a "safe" number.

While 28.9% is a scoring threshold and considered responsible borrowing, 8.9% optimizes one's score. You don't have to go for 8.9% all the time, but it's something to do if you have an application for important credit coming up and you want to eek out some extra points.

Re: Utilization Reports

Anonymous — Mon, 30 Oct 2017 01:55:01 GMT

Recent small data point for me was going from 12% to 0% lost me around 12 points and going to 8% brought back almost 26! Pretty serious difference on my profile from 12% to 8% and surprised me.

Re: Utilization Reports

jc2 — Mon, 30 Oct 2017 02:01:02 GMT

Something else to remember is that only the 'settled' spend amount will report on the statment date. i.e...often, if you spend on the card a day or two prior, and charges are still pending at of close ofstatment, they will not be reflected on the balance that is reported. This also works on payments made to the account and each bank can (and often does) reflect payments in the balance on different time frames/delays. For example, (in my case) Cap One alsways reflects my payments as a deduction the the balance owed the next day after I make the payment. Some of my other cards can take 2-5 days. This is just something to keep in mind if you are planning to manage your reporting balances.

All the Best

Re: Utilization Reports

Anonymous — Mon, 30 Oct 2017 02:02:27 GMT

@Anonymous wrote:
Breakpoints are never at x0% but at x9% but fico rounds up.

So aim for 28.9% instead of 30%.

Also see my 11 rules link in signature!

I see, so it doesn't round up to 30%. It's also nice to see that I made the right decision, at least according to you, with how I started out with my credit cards. I have Discover IT Secured, C1 Platinum, and a Khols store card. In six months I should have a good credit card upgrade path on both of the non-store cards.

Re: Utilization Reports

Anonymous — Mon, 30 Oct 2017 02:04:51 GMT

@HeavenOhio wrote:
"Below 30%" means 29% or below. And 29.0000001% rounds up to 30%. That makes 28.9% or below a "safe" number.

While 28.9% is a scoring threshold and considered responsible borrowing, 8.9% optimizes one's score. You don't have to go for 8.9% all the time, but it's something to do if you have an application for important credit coming up and you want to eek out some extra points.

So effective 9% utilization is better than 0% or anything higher up to 29%? If so I'll definitely aim for 8-8.9% utilization on at least one of my cards.

Re: Utilization Reports

Anonymous — Mon, 30 Oct 2017 02:48:08 GMT

The rules on utilization follow two paths: aggregate utilization (meaning total of all balances divided by total of all credit limits) and individual utilization per card.

If you have an aggregate under 8.9% but above 0% you get the most FICO points for aggregate utilization.

For individual utilization, under 8.9% is better than high amounts. Also the third villain here is how many cards carry a balance of any kind. Maximum FICO points are granted for 1 card (not 0) carrying a small balance but multiple cards carrying a balance of even $5 each can ding you (each bureau dings at a different percentage of cards with a balance).

So your maximum FICO for utilization is one card with a balance of $3 up to 8.9% of your limit and the others reporting $0.

If you do carry a balance, keep that card under 38.9% and aggregate across all cards under 8.9% which helps but not as much as the AZEO Method does.

Re: Utilization Reports

HeavenOhio — Mon, 30 Oct 2017 19:17:53 GMT

Keep the single card utilization under 28.9%. I believe ABCD typo-ed above.

In the case of only having one card, you'd need to stick to 8.9% as your single-card utilization and your aggregate utilization would be the same number.

Also, you don't want to "carry" a balance, as that's synomous with "revolving" a balance. When you want to report, print, or cut a balance, it should come from new charges during the current statement period.

Re: Utilization Reports

Anonymous — Mon, 30 Oct 2017 04:39:31 GMT

@Anonymous wrote:
The rules on utilization follow two paths: aggregate utilization (meaning total of all balances divided by total of all credit limits) and individual utilization per card.

If you have an aggregate under 8.9% but above 0% you get the most FICO points for aggregate utilization.

For individual utilization, under 8.9% is better than high amounts. Also the third villain here is how many cards carry a balance of any kind. Maximum FICO points are granted for 1 card (not 0) carrying a small balance but multiple cards carrying a balance of even $5 each can ding you (each bureau dings at a different percentage of cards with a balance).

So your maximum FICO for utilization is one card with a balance of $3 up to 8.9% of your limit and the others reporting $0.

If you do carry a balance, keep that card under 38.9% and aggregate across all cards under 8.9% which helps but not as much as the AZEO Method does.

Okay then, I have a good question for that. When is utilization across all cards calculated? Every time a billing cycle passes on any of my credit cards? Once a month? If it's not once a month that seems incredibly hard to manage if I actually want to use my credit cards for anything other than building credit.

Re: Utilization Reports

HeavenOhio — Mon, 30 Oct 2017 09:27:14 GMT

Each card reports to the credit bureaus once a month. Most cards report the statement balance on or right after the statement cuts. Statement cut dates are generally about three to seven days after the due date.

US Bank is a notable exception in that it reports whatever your balance is on the first of the month. Chase reports the statement balance at statement time, but it also reports zero whenever you pay your balance to zero. In addition to US Bank and Chase, there are some more obscure exceptions out there.

Utilization is calculated whenever one's report is pulled and a score is applied. Because different cards report at different times, it changes on an ongoing basis. Some people prefer to have all of their statements cut at about the same time of the month and arrange to do that by having their due dates adjusted accordingly. Others prefer to have their statement cut dates staggered.

Re: Utilization Reports

Anonymous — Mon, 30 Oct 2017 12:40:08 GMT

As mentioned, each card will report on a specific day of the billing cycle. Most cards update the credit reports with the balance on their statement date (but the reports may not get this information for 5-7 days). US Bank cards typically update the credit reports with whatever balance is showing on the last day of the month.

Your FICO score is updated when you pull a report or a score. So if you have a card posting a statement on the 15th of the month and another card on the 19th of the month, pulling your credit score to reflect the changes should be done about a week after the last card updates, to give the bureaus time to actually have the data ready to pull.

It sounds really confusing but once you get in a rhythm with each card, you know the time frames to use it.

My Discover reports on the 13th, my Capital One reports on the 11th. So what I do is I use both cards all the way up to maximum but stop using the Discover around the 6th and the Capital One around the 4th. I let charges post and push or pull payments to keep them at the utilization I want them at before their statement date. Once the statement date comes and goes, I use the cards again for the NEXT statement date.

It definitely takes time to feel the rhythm here, but remember if you accidentally let a card report one month, no big deal, next month you can fix it.

In September I was out sailing in the Caribbean and Irma swept in and I got stuck at sea (it wasn't dangerous, it was fun) but there was NO internet signal. So instead of swooping home around the 8th to pay off all my balances to $0 except for one, I ended up coming to dry land around the 13th! ALL my cards reported very high utilization -- my score for September dropped almost 40 points I think. Oops!

Here's the thing: since I wasn't applying for any credit, it didn't matter much to me. My score dropped, I paid all those high balances down correctly right away, and now in October my scores are back to where they were meant to be.

Learn your card rhythms, avoid ever reporting utilization over 88.9% (to FICO, this means maxed out and it KILLS your score temporarily), and make sure to never be late on a payment!

Re: Utilization Reports

SouthJamaica — Mon, 30 Oct 2017 18:00:56 GMT

@Anonymous wrote:
Hi. I'm trying to keep my utilization below 30% when reported, but I'm confused on spending above 30% of my limit without it getting reported.

Example.

Statement is on the 2nd of each month. I spend 30% of my limit on the 1st and my statement due on the 2nd is 30% of my limit. They report to the credit bureaus on the 3rd. I don't spend anything on the credit card until the 10th and max out my credit line that day. I pay it down to below 30% on the 20th. I don't spend anything until my next statement and the next statement shows that I owe below 30% of my credit line.

Do the credit bureaus know that I spent up to my credit limit or do they only know that my utilization when reported was below 30%? Does it matter if I max out my credit card and pay it off before the billing cycle?

Maxing it out during the month might not affect your score, but might set off some red flags with your lender.