topic Re: Utilization Question... in Understanding FICO® Scoring

Utilization Question...

Andy77 — Fri, 07 Mar 2008 18:04:14 GMT

Is this is wise Idea and will this help my score...

So my chevron CL is 1000, my bal is 550...

I just got a new Discover with a 5k limit...should I transfer the Chevron bal to the discover thus boosting my score since my utilization would look better since the Discover card has a higher CL?

What do you al think?

Re: Utilization Question...

Junejer — Fri, 07 Mar 2008 18:09:33 GMT

If you are able to do so, that would make your overall and individual uti 11%. For best scoring results, get it under 10%. If you are able to transfer and pay $100, you would get a nice bump. Once Discover starts reporting, you will see an increase anyway, due to the new overall uti.

Re: Utilization Question...

Anonymous — Fri, 07 Mar 2008 18:11:20 GMT

Andy77 wrote:

Is this is wise Idea and will this help my score...

So my chevron CL is 1000, my bal is 550...

I just got a new Discover with a 5k limit...should I transfer the Chevron bal to the discover thus boosting my score since my utilization would look better since the Discover card has a higher CL?

What do you al think?

Yes, it will be better for your score, but make sure you consider BT fees that might be involved.

What is the APR on the balance on the Chevron card, what is the BT APR on the Discover card, and how long do you expect it to take you to pay off the $550?

Message Edited by cheddar on 03-07-2008 01:11 PM

Re: Utilization Question...

Andy77 — Fri, 07 Mar 2008 18:19:05 GMT

There are no Balance Transfer fees and Discover has zero interest for a yr.

I imagine I could pay it off within a few months....financially it makes more sense to do this, but how much of a score increase do you think I would be getting?

Re: Utilization Question...

Junejer — Fri, 07 Mar 2008 18:22:18 GMT

Andy, do the simulator and pull down the dropdown menu for 3 months. It will give you a pretty accurate score range.

Re: Utilization Question...

Andy77 — Fri, 07 Mar 2008 21:53:50 GMT

Well I bit the bullet and paid off every card....so now I will have zero revolving debt and 97% utilizaiton on 2 installment accounts...

Having such a high utilizaiton on installment accounts looks better then high on revolving accounts right?

Re: Utilization Question...

Anonymous — Fri, 07 Mar 2008 22:01:06 GMT

Andy77 wrote:

Well I bit the bullet and paid off every card....so now I will have zero revolving debt and 97% utilizaiton on 2 installment accounts...

Having such a high utilizaiton on installment accounts looks better then high on revolving accounts right?

Yes, not only does it look better, but FICO will not ding you nearly as much for it, either.

For maximum FICO points, let your revolving utilization be 1-9% rather than $0.

Re: Utilization Question...

Andy77 — Fri, 07 Mar 2008 22:05:23 GMT

This is one thing that is holding me back from a higher score regarding the two installment loans:

Your FICO score weighs the balances of your non-mortgage installment loans (such as auto loan or student loans) against the original loan amounts. In general, when you first obtain an installment loan your balance is high, and as you pay this loan down, the balance decreases.

I guess that is saying my installment loan balances are too high....and this is dinging my score...I wonder how much?

What do you think?

Re: Utilization Question...

Junejer — Fri, 07 Mar 2008 22:08:14 GMT

@Andy77 wrote:
Well I bit the bullet and paid off every card....so now I will have zero revolving debt and 97% utilizaiton on 2 installment accounts...

Having such a high utilizaiton on installment accounts looks better then high on revolving accounts right?

The installment uti doesn't hurt very bad (it's less risky). You want less than half of your total open accounts to carry a balance. Yet, you might want to have ONE of your cards report a small balance 1-9% utilization on the ONE card, not all.

Re: Utilization Question...

Anonymous — Sat, 08 Mar 2008 00:03:56 GMT

Agre with ByrdMan. Revolving utilization is a much larger factor in FICO scoring than installment utilization.

Re: Utilization Question...

haulingthescoreup — Sat, 08 Mar 2008 03:01:02 GMT

@Andy77 wrote:

This is one thing that is holding me back from a higher score regarding the two installment loans:
Your FICO score weighs the balances of your non-mortgage installment loans (such as auto loan or student loans) against the original loan amounts. In general, when you first obtain an installment loan your balance is high, and as you pay this loan down, the balance decreases.
I guess that is saying my installment loan balances are too high....and this is dinging my score...I wonder how much?
What do you think?

I got the identical message when my car loan posted. I'm going to knock it down to 90% right away, and then see how much lower it will have to go (to what % util) with regular payments before the message goes away.

Woo-hoo! A new research project.