topic Re: What are the CC utilization levels? in Understanding FICO® Scoring

What are the CC utilization levels?

diane11 — Sun, 10 May 2020 23:25:30 GMT

I have some extra cash and would like to pay down some credit card debt, but trying to figure out how much to pay on each card. I know that the lower the utilization, the better (obviously), but what are the percentages where I'll get a score boost?

Re: What are the CC utilization levels?

AllZero — Sun, 10 May 2020 23:27:11 GMT

@diane11 wrote:
I have some extra cash and would like to pay down some credit card debt, but trying to figure out how much to pay on each card. I know that the lower the utilization, the better (obviously), but what are the percentages where I'll get a score boost?

Remember these aggregate utilization thresholds: 8.9%, 28.9%, 48.9%, 68.9%, 88.9%
Remember these individual utilization thresholds: 28.9%, 48.9%, 68.9%, 88.9%

If you're not crossing a threshold, you won't be getting points.

Aggregate: 10-15 points for aggregate crossing a threshold.

Individual: ~5 points points for individual crossing a threshold.

Look into AZEO Technique. All Zero Except One card reporting a small balance e.g. $5-$10. Use a bank card. Do not use a store card.

Get your CC aggregate utility at or below 8.9% for full FICO points optimization.

Scores will react positively with one revolving credit card reporting a balance.

Re: What are the CC utilization levels?

AllZero — Sun, 10 May 2020 23:27:25 GMT

I would recommend reading the below from ABCD2199
The Truth about Credit Card Utilization
My 11 Rules to Credit Rebuilding
FICO Score: What to pay down first?

Re: What are the CC utilization levels?

EAJuggalo — Sun, 10 May 2020 23:28:01 GMT

8.9, 28.9, 48.9, 68.9, 88.9 is what I've gleaned from around here.

Re: What are the CC utilization levels?

Anonymous — Mon, 11 May 2020 02:58:09 GMT

^^^ correct but you'd do well to pay to 7/27/47/67/87 so that after interest is added, you remain below the cutoffs instead of going back over the breakpoints and losing the gains.

Re: What are the CC utilization levels?

SouthJamaica — Mon, 11 May 2020 12:43:08 GMT

@diane11 wrote:
I have some extra cash and would like to pay down some credit card debt, but trying to figure out how much to pay on each card. I know that the lower the utilization, the better (obviously), but what are the percentages where I'll get a score boost?

The most important breakpoint for individual card utilization is 28.9%.

Re: What are the CC utilization levels?

Andypanda — Tue, 12 May 2020 00:21:32 GMT

This seems to be a common newbie question. It might be useful for a moderator to sticky, pin, or whatever tge correct term is so it is easy to find. Just a friendly suggestion.

Re: What are the CC utilization levels?

credit_endurance — Wed, 13 May 2020 03:29:20 GMT

@SouthJamaica wrote:
@diane11 wrote:
I have some extra cash and would like to pay down some credit card debt, but trying to figure out how much to pay on each card. I know that the lower the utilization, the better (obviously), but what are the percentages where I'll get a score boost?
The most important breakpoint for individual card utilization is 28.9%.

What seems to be the most optimum breakpoint for installment loans?

Re: What are the CC utilization levels?

Anonymous — Wed, 13 May 2020 03:32:16 GMT

Under 9% on a loan gives a good score boost, often in the 20 point range. Note that if you have more than one loan, that's an aggregate loan balance under 9%.

Re: What are the CC utilization levels?

AzCreditGuy — Wed, 13 May 2020 11:21:11 GMT

@AllZero wrote:
@diane11 wrote:
I have some extra cash and would like to pay down some credit card debt, but trying to figure out how much to pay on each card. I know that the lower the utilization, the better (obviously), but what are the percentages where I'll get a score boost?
Remember these aggregate utilization thresholds: 8.9%, 28.9%, 48.9%, 68.9%, 88.9%
Remember these individual utilization thresholds: 28.9%, 48.9%, 68.9%, 88.9%

If you're not crossing a threshold, you won't be getting points.

Aggregate: 10-15 points for aggregate crossing a threshold.

Individual: ~5 points points for individual crossing a threshold.

Look into AZEO Technique. All Zero Except One card reporting a small balance e.g. $5-$10. Use a bank card. Do not use a store card.

Get your CC aggregate utility at or below 8.9% for full FICO points optimization.

Scores will react positively with one revolving credit card reporting a balance.

I would take the above with a grain a salt as I had Individual and total ratio cross thresholds and only gained 9 pts for what should have seemed 30+ pts gained for my progress, which didnt happen

Re: What are the CC utilization levels?

SouthJamaica — Wed, 13 May 2020 11:57:03 GMT

@credit_endurance wrote:
@SouthJamaica wrote:
@diane11 wrote:
I have some extra cash and would like to pay down some credit card debt, but trying to figure out how much to pay on each card. I know that the lower the utilization, the better (obviously), but what are the percentages where I'll get a score boost?
The most important breakpoint for individual card utilization is 28.9%.
What seems to be the most optimum breakpoint for installment loans?

9% in FICO 8.

Re: What are the CC utilization levels?

Thomas_Thumb — Thu, 14 May 2020 04:04:04 GMT

@AllZero wrote:
@diane11 wrote:
I have some extra cash and would like to pay down some credit card debt, but trying to figure out how much to pay on each card. I know that the lower the utilization, the better (obviously), but what are the percentages where I'll get a score boost?
Remember these aggregate utilization thresholds: 8.9%, 28.9%, 48.9%, 68.9%, 88.9%
Remember these individual utilization thresholds: 28.9%, 48.9%, 68.9%, 88.9%

If you're not crossing a threshold, you won't be getting points.
Aggregate: 10-15 points for aggregate crossing a threshold.
Individual: ~5 points points for individual crossing a threshold.

Look into AZEO Technique. All Zero Except One card reporting a small balance e.g. $5-$10. Use a bank card. Do not use a store card.
Get your CC aggregate utility at or below 8.9% for full FICO points optimization.
Scores will react positively with one revolving credit card reporting a balance.

The three primary Fico scoring attributes relating to credit cards are:

1. Aggregate utilization

2. Percent and/or number of cards reporting balances.

3. Individual card utilization (mostly influenced by highest utilization on any of the individual cards but, QTY above some threshold may come into play as well)

The impact of the above attributes on score depends on the Fico model, the CRA within that model and what scorecard your profile is assigned to. Regardless of the model, CRA or scorecard, make enough of a paydown to drop aggregate utilization to a lower tier. The thresholds mentioned above are good benchmarks although I would say below 9%, below 29% ... Also focused recent testing strongly indicates an aggregate threshold somewhere in the 4% to 6% range also exists (at least for young/thin scorecards).

If you are concerned about your Fico mortgage scores, I'd prioritize a paydown strategy that takes multiple cards to zero balance. Both EQ and TU mortgage Ficos can severely penalize score when more than 50% of cards report balances - particularly if you have recent inquiries on those CRAs. Fico 8 is less sensitive to QTY or % of cards reporting balances. If Fico 8 is your focus, get one card to zero balance and then prioritize bringing individual cards under a target utilization threshold (say 49% to start).

I think it is a mistake to assume each threshold crossed carries equal weight. My view is aggregate utilization thresholds of 9%, 49% and 89% (max out category) are more significant than 29% and 69%. Certainly maxing out aggregate utilization is considered very risky behavior relative to a future 90 day late payment.

Here is an example. Let's say someone has 5 cards with credit limits of 1k, 1k, 3k, 5k and 10k. Currently aggregate utilization is 70% ($14k overall balance). The person has up to $10k available to paydown but would like to hold some back for other obligations. Forgetting about logistical issues; how should remaining balances be allocated after paydown for Fico mortgage and Fico 8 models.

First check and see what balance represents 29% aggregate utilization then determine what means for a payment:

$20k x 0.29 = $5.8k balance. $14k - $5.8k = $8.2k in payments which is less than the $10k available. Let's target $8.5k in payments to leave a $5.5k balance (27.5% utilization). [aggregate UT crosses 69%, 49% and 29% thresholds]

A. For Mortgage Ficos it is best if less than 50% of cards report balances - so pay off the low lmit cards and proportion the remainder as needed to keep individual thresholds below 49% on the remaining two cards.

1st $1k card => $0

2nd $1k card => $0

3rd $3k card => $0

4th $5k card => $2.0k (40% UT)

5th $10k card => $3.5k (35% UT)

Now, if the $1.5k still in reserve were used toward payments would it matter. Possibly. Since we are dealing with mortgage Ficos getting to AZEO might have value. Change the 5th card to a $4.0k balance (still under 49%) and pay $1.5k to take the 4th card to $0.

B. For Fico 8 going to AZEO may not positively influence score further. So, keep the $1.5k reserve for the other obligations.

Re: What are the CC utilization levels?

Anonymous — Thu, 14 May 2020 00:20:22 GMT

Always great to see you posting @Thomas_Thumb - thank you again for dropping the knowledge.

Re: What are the CC utilization levels?

AllZero — Thu, 14 May 2020 00:54:28 GMT

@Thomas_Thumb wrote:
@AllZero wrote:
@diane11 wrote:
I have some extra cash and would like to pay down some credit card debt, but trying to figure out how much to pay on each card. I know that the lower the utilization, the better (obviously), but what are the percentages where I'll get a score boost?
Remember these aggregate utilization thresholds: 8.9%, 28.9%, 48.9%, 68.9%, 88.9%
Remember these individual utilization thresholds: 28.9%, 48.9%, 68.9%, 88.9%

If you're not crossing a threshold, you won't be getting points.
Aggregate: 10-15 points for aggregate crossing a threshold.
Individual: ~5 points points for individual crossing a threshold.

Look into AZEO Technique. All Zero Except One card reporting a small balance e.g. $5-$10. Use a bank card. Do not use a store card.
Get your CC aggregate utility at or below 8.9% for full FICO points optimization.
Scores will react positively with one revolving credit card reporting a balance.
The three primary Fico scoring attributes relating to credit cards are:
1. Aggregate utilization
2. Percent and/or number of cards reporting balances.
3. Individual card utilization (mostly influenced by highest utilization on any of the individual cards but, QTY above some threshold may come into play as well)

The impact of the above attributes on score depends on the Fico model, the CRA within that model and what scorecard your profile is assigned to. Regardless of the model, CRA or scorecard, make enough of a paydown to drop aggregate utilization to a lower tier. The thresholds mentioned above are good benchmarks although I would say below 9%, below 29% ... Also focused recent testing strongly indicates an aggregate threshold somewhere in the 4% to 6% range also exists (at least for young/thin scorecards).

If you are concerned about your Fico mortgage scores, I'd prioritize a paydown strategy that takes multiple cards to zero balance. Both EQ and TU mortgage Ficos can severely penalize score when more than 50% of cards report balances - particularly if you have recent inquiries on those CRAs. Fico 8 is less sensitive to QTY or % of cards reporting balances. If Fico 8 is your focus, get one card to zero balance and then prioritize bringing individual cards under a target utilization threshold (say 49% to start).

I think it is a misnomer to look at each threshold scossing carrying equal weight. My view is aggregate utilization thresholds of 9%, 49% and 89% (max out category) are more significant than 29% and 69%. Certainly maxing out aggregate utilization is considered very risky behavior relative to a future 90 day late payment.

Here is an example. Let's say someone has 5 cards with credit limits of 1k, 1k, 3k, 5k and 10k. Currently aggregate utilization is 70% ($14k overall balance). The person has up to $10k available to paydown but would like to hold some back for other obligations. Forgetting about logistical issues; how should remaining balances be allocated after paydown for Fico mortgage and Fico 8 models.

First check and see what balance represents 29% aggregate utilization then determine what means for a payment:
$20k x 0.29 = $5.8k balance. $14k - $5.8k = $8.2k in payments which is less than the $10k available. Let's target $8.5k in payments to leave a $5.5k balance (27.5% utilization). [aggregate UT crosses 69%, 49% and 29% thresholds]

A. For Mortgage Ficos it is best if less than 50% of cards report balances - so pay off the low lmit cards and proportion the remainder as needed to keep individual thresholds below 49% on the remaining two cards.
1st $1k card => $0
2nd $1k card => $0
3rd $3k card => $0
4th $5k card => $2.0k (40% UT)
5th $10k card => $3.5k (35% UT)

Now, if the $1.5k still in reserve were used toward payments would it matter. Possibly. Since we are dealing with mortgage Ficos getting to AZEO might have value. Change the 5th card to a $4.0k balance (still under 49%) and pay $1.5k to take the 4th card to $0.

B. For Fico 8 going to AZEO may not positively influence score further. So, keep the $1.5k reserve for the other obligations.

Hi @Thomas_Thumb Thank you for your feedback. It's greatly appreciated. I'll make updates to my notes regarding the FICO 8s and mortgage scores. Mine were too generalized. I like yours a lot better.

Yes, I recall CassieCard posts on the thin profile for the 4% to 6% range. It was very informational.

Re: What are the CC utilization levels?

M_Smart007 — Thu, 14 May 2020 02:05:51 GMT

I can attest to all the post above as being very accurate ^^^^^^^^^^^

other than a thin young file, as mine is pretty aged and thick like Me

I have crossed multiple times of aggregate and Individual while watching closely over a years period of time.

One thing I do notice, that having over 50 revolving accounts. letting 10-15 report at under 28.9% Util.,

does not have the affect as it did when I had 20 or so accounts.

Also having a good amount of Aggregate Util. padding really helps.

I watch EX more closely than EQ or TU.

Just seen a few points going from 9% aggregate to 6% aggregate with no other changes.

Just my $0.02's worth.

Re: What are the CC utilization levels?

Anonymous — Thu, 14 May 2020 19:06:41 GMT

@M_Smart007 wrote:
I watch EX more closely than EQ or TU.
Just seen a few points going from 9% aggregate to 6% aggregate with no other changes.

I think the internal breakpoints are all along the lines of 0,10,30,50, etc., with one at 5% for EQ/TU/EX 8 on new credit scorecards like mine.

(Most articles mention staying under 10 or 30% - I bet the source was the analytics team who set these thresholds.)

If you see something change at 6%, check your total aggregate balance - this dollar amount may be the reason.

In Excel, take ceiling( (TotalBal/TotalLimit) * 100, 1) and compare to one of the above breakpoints. It's the same result as using 0,4,9,29 - the forum way just simplifies the comparison.