topic Re: Over 100% utilization how much does it hurt score? in Understanding FICO® Scoring

Over 100% utilization how much does it hurt score?

Anonymous — Tue, 10 Mar 2020 17:42:00 GMT

If you have student loans or any loans for that matter if they owe more than originally disbursed, how much does that hurt your score? Any bump for getting them under 100%? Thanks for any replies

Re: Over 100% utilization how much does it hurt score?

Girlzilla88 — Tue, 10 Mar 2020 17:53:30 GMT

A good bit you are going to want to get under 60% first then under 50% then under 30%, if you can stay under 30 ideally under 10% that is GREAT but since it is loan and not revolving the faster you pay it off the better so if you have interest you dont pay to much based off your high utl

Re: Over 100% utilization how much does it hurt score?

dragontears — Tue, 10 Mar 2020 18:00:03 GMT

@Girlzilla88 wrote:
A good bit you are going to want to get under 60% first then under 50% then under 30%, if you can stay under 30 ideally under 10% that is GREAT but since it is loan and not revolving the faster you pay it off the better so if you have interest you dont pay to much based off your high utl

I disagree, loan utilization is a small aspect of your credit score that most of the time it doesn't matter much. And generally a score effect is only observed when the total loan utilization is under 9%.

Always finances > FICO.

I have yet to see posts about the thresholds you list (i.e. 60%, 50%, 30%) in regards to INSTALLMENT loans, can you please provide a reference post for these values?

Re: Over 100% utilization how much does it hurt score?

Girlzilla88 — Tue, 10 Mar 2020 18:22:48 GMT

I guess those are more in reference to adding to a profile rather than Damaging the score?! I guess I should have asked if OP is intending to add anything or apply for anything in the near future with it being that high?!

Re: Over 100% utilization how much does it hurt score?

Anonymous — Tue, 10 Mar 2020 21:24:34 GMT

It doesn't matter if they are over. Once it's at that point you maxed out any penalty. Also, you won't get back any points until you've paid off a significant percentage of your loans.

Most people ask this in an attempt to focus on it to raise your score. Since it's a student loan, you'd instead see more of a point gain from focusing on other areas imo, such as credit card utilization or just letting your accounts age.

It's not uncommon to be over 100% especially on IDR with forgiveness. I wouldn't worry about it. 🙂

Re: Over 100% utilization how much does it hurt score?

donkort — Wed, 11 Mar 2020 18:49:59 GMT

My student loans are over 100% utlization----but my car loan is about 33% utilization, since I paid off two-thirds of the loan. So my overall installment-loan utilization is 64%. I have $65,000 in student loans. If I were to pay off $4,000, I would get about a 30-point score bump. I believe this is because paying off the $4,000 would bring my utilization down below 100%.

As for revolving credit, there's thresholds at 88.9%, 68.9%, 48.9%, 28.9% (a biggie), and 8.9% (the biggest of the biggies). There's also a smaller one at 5.9%, I believe (though that hasn't been documented).

Re: Over 100% utilization how much does it hurt score?

SouthJamaica — Thu, 12 Mar 2020 11:09:36 GMT

@donkort wrote:
My student loans are over 100% utlization----but my car loan is about 33% utilization, since I paid off two-thirds of the loan. So my overall installment-loan utilization is 64%. I have $65,000 in student loans. If I were to pay off $4,000, I would get about a 30-point score bump. I believe this is because paying off the $4,000 would bring my utilization down below 100%.

As for revolving credit, there's thresholds at 88.9%, 68.9%, 48.9%, 28.9% (a biggie), and 8.9% (the biggest of the biggies). There's also a smaller one at 5.9%, I believe (though that hasn't been documented).

Sorry but I don't understand what you just said. I think there's a typo in there somewhere.

Certainly, if your aggregate installment utilization is 64%, against a total of original loans of $100k, your paying $4k -- going from 64% to 60% -- isn't going to give you a 30 point bump. More likely it wouldn't get you any points at all.

Re: Over 100% utilization how much does it hurt score?

SouthJamaica — Thu, 12 Mar 2020 11:12:31 GMT

@Anonymous wrote:
It doesn't matter if they are over. Once it's at that point you maxed out any penalty. Also, you won't get back any points until you've paid off a significant percentage of your loans.
Most people ask this in an attempt to focus on it to raise your score. Since it's a student loan, you'd instead see more of a point gain from focusing on other areas imo, such as credit card utilization or just letting your accounts age.
It's not uncommon to be over 100% especially on IDR with forgiveness. I wouldn't worry about it. 🙂

Re: Over 100% utilization how much does it hurt score?

donkort — Thu, 12 Mar 2020 12:35:28 GMT

According to the simulator, if I pay $4,000 on the student loan, my FICO 8 scores go up to the 820s-830s. A 30-40 point increase.

I'm theorizing if this is the result of the utilization for this particular item going below 100%. It's about 120% now.

Re: Over 100% utilization how much does it hurt score?

seattletravels — Thu, 12 Mar 2020 14:42:06 GMT

I wouldn't necessarily trust the accuracy of the simulator. Generally, loan utilization is not a major factor in your score. New accounts, revolving utilization, inquiries, derogatory accounts, length of credit, etc. all have much higher impact. Most people dont see an impact for loan ut% until it gets ~8%.

However, if loan ut% is the only negative factor impacting your score - which I'm assuming based on the simulator saying you'll be in the 820s by paying 4k on your loans - it's entirely possible individual loan ut% could have a material impact for you.

Re: Over 100% utilization how much does it hurt score?

donkort — Thu, 12 Mar 2020 15:13:03 GMT

Installment-loan utilization is the only thing holding back my score. I have no derogatories----and haven't had one for over 7 years.

I have a "boring" report, really. $67,570 in credit limits. 19 total accounts, the vast majority revolvers. 3% overall revolver utilization, 1 card at 28% utilization. Auto lease paid as agreed for 2 years. $65,000 student loan paid as agreed for 14 years.

Average Age of Accounts: from 7 years 6 months to 8 years 6 months depending on the credit bureau. Youngest account 1 year, 1 month.

Re: Over 100% utilization how much does it hurt score?

SouthJamaica — Thu, 12 Mar 2020 15:31:22 GMT

@donkort wrote:
According to the simulator, if I pay $4,000 on the student loan, my FICO 8 scores go up to the 820s-830s. A 30-40 point increase.

I'm theorizing if this is the result of the utilization for this particular item going below 100%. It's about 120% now.

The simulator is providing you with pure baloney. Trust me.

Re: Over 100% utilization how much does it hurt score?

SouthJamaica — Thu, 12 Mar 2020 15:30:26 GMT

@donkort wrote:
Installment-loan utilization is the only thing holding back my score. I have no derogatories----and haven't had one for over 7 years.

I have a "boring" report, really. $67,570 in credit limits. 19 total accounts, the vast majority revolvers. 3% overall revolver utilization, 1 card at 28% utilization. Auto lease paid as agreed for 2 years. $65,000 student loan paid as agreed for 14 years.

Average Age of Accounts: from 7 years 6 months to 8 years 6 months depending on the credit bureau. Youngest account 1 year, 1 month.

Yes you have a great profile, which is why your scores are clustered around 800.

And there is no way you're getting 30-40 points for paying down 4% of your outstanding loans.

Re: Over 100% utilization how much does it hurt score?

Anonymous — Thu, 12 Mar 2020 22:47:22 GMT

Your reports somewhat similar to mine.

Imo you aren't getting a 30 point gain unless you paid off the entire student loan. You didn't lose that much from getting student loans and if they're over 100% sounds like you're on the path to forgiveness maybe? For whatever reason, the next threshold for the student loans is way down (unlike revolving accounts). We've had this question asked repeatedly and they usually found a better increase by working on the rest of their report.

As far as your other loan, paying it down will not get the points back from the student loans. So your age (which isn't maxed out, I think), your credit card balance (utilization over 8.9%), and recent HP (which shouldn't affect your score anymore but might still) would give you a good bump if you improved those areas. Trust me, the simulator keeps telling me to get a new card and move some of my balance to it to get magical 15 points. I don't think so, lol!

My advice would be pay down the credit card with the 28% utilization. Once you get all your cards under 8.9% and maybe even do AZEO, you'll see a nice boost.

Good luck no matter which path you chose. Hope this helps.

Re: Over 100% utilization how much does it hurt score?

donkort — Thu, 12 Mar 2020 22:53:29 GMT

If I would have paid my loans on time, every time, I would have had student loan forgiveness now : - (

I was never 90 days late----but I was usually between 30-60 days late until a couple of years ago. Luckily, I was never reported to the credit bureaus.

Re: Over 100% utilization how much does it hurt score?

Anonymous — Thu, 12 Mar 2020 23:01:54 GMT

Yeah, student loans are surrounded by "if only"s because TBH many of us are I'll-informed or too your to understand the impact on our credit score.

For example, most people don't know they can have their monthly payment amount recalculated early based on a significantly lower paycheck (even if it's not going to be your permanent salary). The new payments will be good for a year.

Are you going for IDR forgiveness or PSLF?

Re: Over 100% utilization how much does it hurt score?

donkort — Thu, 12 Mar 2020 23:15:18 GMT

I am a public-sector employee.

I had Loan Forbearance until about 2009-2010. I graduated from college in 2006.

It's remarkable how I didn't know a darn thing about credit until the late 2000s.....when I was already in my late 40's. This Site has helped me quite a bit.

Re: Over 100% utilization how much does it hurt score?

seattletravels — Fri, 13 Mar 2020 02:57:34 GMT

46% Decrease in Installment UT% = +11 Points