topic Re: Utilization Question - Single Card vs Multiple in Understanding FICO® Scoring

Utilization Question - Single Card vs Multiple

Anonymous — Fri, 28 Dec 2018 03:39:13 GMT

Hello all,

So the question I have is, what hits a fico more; having a single card over 75% utilization but multiple other cards at or near zero, or spreading the balances out among many cards? What if those other cards charge far higher interest rates?

Re: Utilization Question - Single Card vs Multiple

SouthJamaica — Fri, 28 Dec 2018 03:52:42 GMT

@Anonymous wrote:
Hello all,

So the question I have is, what hits a fico more; having a single card over 75% utilization but multiple other cards at or near zero, or spreading the balances out among many cards? What if those other cards charge far higher interest rates?

1. FICO is indifferent to the interest rates. It doesn't give you points for financial astuteness in getting a lower interest rate or even zero interest.

2. My impression is that overall percentage utilization is a bigger point factor than individual percentage utilization in FiCO 8, but they both count. In my experience 29-30% is an important breakpoint in individual utilization, so I would try to limit any individual account to 28% or less.

Re: Utilization Question - Single Card vs Multiple

Anonymous — Fri, 28 Dec 2018 04:45:03 GMT

Spreading it out might get you some points but not worth paying more interest, finances always come first unless you got a mortgage application coming up, which still puts finances first.

Re: Utilization Question - Single Card vs Multiple

Revelate — Sat, 05 Jan 2019 17:47:26 GMT

Probably scorecard dependant, so YMMV.

For me, I'd rather be carrying it all on a single line at the lowest APR possible: financial win to Oldman's point.

It's probably going to be your best scoring decision too underneath the 80% line (or 90%, I really hate revolving datapoints which come in all over the place, less is better though, nuff said).

Re: Utilization Question - Single Card vs Multiple

NRB525 — Sat, 05 Jan 2019 20:33:44 GMT

Take the lower interest cost option first, because it gives you a better chance to pay off that debt.

FICO score is second to hard dollar financial decisions.

Re: Utilization Question - Single Card vs Multiple

Anonymous — Mon, 07 Jan 2019 02:46:14 GMT

Okay thank you all for the advice!

I have one other question.. if the card utilization is under 8.9% but still has a balance, does it ding the FICO?

Re: Utilization Question - Single Card vs Multiple

Revelate — Mon, 07 Jan 2019 03:42:42 GMT

@Anonymous wrote:
Okay thank you all for the advice!

I have one other question.. if the card utilization is under 8.9% but still has a balance, does it ding the FICO?

Different part of the algorithm measures number of revolvers (or number of accounts in some models). Fewer is better, most but not all $0 FTW.

Re: Utilization Question - Single Card vs Multiple

Anonymous — Mon, 07 Jan 2019 22:43:19 GMT

So you are saying that it would be a little better to just pay that card to 0 rather than keep a small balance?

Re: Utilization Question - Single Card vs Multiple

Revelate — Mon, 07 Jan 2019 22:51:06 GMT

@Anonymous wrote:
So you are saying that it would be a little better to just pay that card to 0 rather than keep a small balance?

Optimal is 1 card with a small balance on it, national bank card ideal, when we're talking FICO scoring. That works for any file and any model, certainly any file with 3+ tradelines.

You don't want all credit cards at zero as there's a penalty for "no recent activity on a revolving tradeline" but ultimately the more at $0 you have the better off you are from a scoring perspective.

Re: Utilization Question - Single Card vs Multiple

Thomas_Thumb — Tue, 08 Jan 2019 14:26:46 GMT

If you are carrying a sizeable balance, there are situations where splitting a balance amoung two cards is better score wise than having the entire balance ope one card - especially for Fico 8.

For example, If you have 4 cards with $500 CL per card and a total balance of $450 it would be better to split the $450 evenly between 2 cards as opposed to having the entire balance on one card.

1) $450 on one card => 90% card utilization (substantial score penalty)

2) $225 on each of 2 cards => 45% card utilizations (small score penalty)

In both the above cases aggregate utilization is 22.5%

Re: Utilization Question - Single Card vs Multiple

Anonymous — Tue, 08 Jan 2019 15:46:38 GMT

How would you define "small" and "substantial" above though? 8 points vs 18 points for example? Just curious. I ask because in the grand scheme of things I don't believe it would really matter much. Also in the example given above, the person would be moving from 25% of cards with a balance to 50% of cards with a balance, which could impose another small (say) 6 point penalty. Using my from the hip numbers above, you'd only be looking at a 4 point variance between the two different scenarios. Maybe my guesses are off here, but to me it doesn't seem like it would be significant. No doubt the impact would be profile-specific.

Re: Utilization Question - Single Card vs Multiple

Anonymous — Wed, 09 Jan 2019 00:03:11 GMT

Ah gotcha! okay well, I might do that then. Move some balance over I mean to divide it up a bit

Re: Utilization Question - Single Card vs Multiple

Thomas_Thumb — Wed, 09 Jan 2019 13:12:24 GMT

I suspect a clean profile with a solid Fico score could lose 20 to 30 points by maxing out (> 89% UT) a card even if aggregate UT is maintained under 9%. On the other hand, I would anticipate drop to be no more than 10 points for two cards in the 40% to 49% with the same below 9% aggregate utilization. Thus, net difference could certainly be 10 to 15 points - IMO.

I am not an advocate of transferring funds around. If I needed to carry a balance over an extended time frame, I'd manage future charges to create an equal split between two cards (or even three cards) as opposed to transferring funds.

Side note: A profile with 4 cards likely won't see a Fico 8 score difference reporting a small balance on 1 vs 2 cards but, might see a 5 to 10 point drop on the older Fico mortgage models - particularly Equifax. In summary, reducing high utilization on a single card by focusing future charges on a secondary card is a good strategy for Fico 8 but, not as beneficial on the older Fico mortgage models.

Re: Utilization Question - Single Card vs Multiple

Anonymous — Wed, 09 Jan 2019 02:12:03 GMT

Interesting. I'd like to hear from someone that's got a clean file and taken a card from ideal to maxed out utilization to see what kind of score impact it had. In fact, I'm going to start a thread on this subject, as I'd really like to know.

Re: Utilization Question - Single Card vs Multiple

Revelate — Wed, 09 Jan 2019 02:31:03 GMT

If no one else has a clean file datapoint I'll simply charge next months HOA fee on my DCU Secured card. $482/500 should sort that.

I only tested on dirty file.

Re: Utilization Question - Single Card vs Multiple

Anonymous — Wed, 09 Jan 2019 13:24:09 GMT

That would be cool. These are the times I wish I had self-initiated that CLD on my Cap One QS from 4k to a few hundred bucks back in 2017 so I'd have a card to play with for these things.

Re: Utilization Question - Single Card vs Multiple

Revelate — Thu, 10 Jan 2019 12:30:34 GMT

Heh I will do you one credit geekier:

I opened up a minimum 200 CL secured card with Discover to go test that: and then they graduated me .

Re: Utilization Question - Single Card vs Multiple

Anonymous — Fri, 11 Jan 2019 02:21:22 GMT

@Revelate wrote:
Heh I will do you one credit geekier:

I opened up a minimum 200 CL secured card with Discover to go test that: and then they graduated me .

You just did, or you already had one?

Impressive dedication!

Re: Utilization Question - Single Card vs Multiple

Anonymous — Fri, 01 Feb 2019 00:02:17 GMT

So I have an update.

Momentarily my score dropped 54 points but as the other cards updated the proper balances, it has now gone up 49 points.

Re: Utilization Question - Single Card vs Multiple

Anonymous — Fri, 01 Feb 2019 00:46:47 GMT

@Anonymous wrote:
So I have an update.

Momentarily my score dropped 54 points but as the other cards updated the proper balances, it has now gone up 49 points.

Can list out your before and after accounts with their balances/limits here? Basically, what did your CR look like originally before the 49 point gain and what does it look like now with the 49 point gain? The key pieces of information here would be aggregate utilization before/after, highest individual card utilization before/after and total number of accounts with a [non-zero] reported balance before/after.