topic Re: How will 50% utilization affect score? in Understanding FICO® Scoring

How will 50% utilization affect score?

Anonymous — Sat, 19 Sep 2020 21:51:36 GMT

I am having surgery soon. It's going to cost what's left of my deductible, about $3k. I have two credit cards, one is OpenSky secured ($200) that I only use for Netflix subscription, and a Discover with a 6k credit line. I only have a balance of $275 on that card, so my utilization is very low. (My Discover card is It with cash back and it's a new card, so I have 0% interest for the next year.) If I put the entire balance of my surgery on my card, that will put my utilization at approximately 50%. Will that be hugely detrimental to my score?

Re: How will 50% utilization affect score?

ridgebackpilot — Sat, 19 Sep 2020 22:14:44 GMT

Yes, you'll lose around 20-30 points when you increase your utilization to 50 percent.

But remember, that's temporary! As soon as you pay your cards down, your scores will go right back up. Fortunately, utilization has no memory. Many of us experience score fluctuations periodically due to rising or falling utilization. Good luck!

Re: How will 50% utilization affect score?

dacv01 — Sat, 19 Sep 2020 22:58:45 GMT

+1. The good news is this will bounce back once balance decreases. I am sitting at 50% currentl on CR and dropped 22 points when this was raised. Just paid down to below 30% so this will give me a good boost

Re: How will 50% utilization affect score?

AllZero — Sat, 19 Sep 2020 23:02:57 GMT

Excellent advise from all of the above.

Finances over FICO. Take advantage of that 0% APR promo.

Re: How will 50% utilization affect score?

Anonymous — Sat, 19 Sep 2020 23:14:19 GMT

^^^ this. Plus, 48.9% is a scoring breakpoint. Pay Disco down to 48% (which would be a payment down to a balance of $2880), and you'll fall under that threshold and probably pick up 5 points or so right then.

Re: How will 50% utilization affect score?

Harvey26 — Sat, 19 Sep 2020 23:24:34 GMT

@Anonymous wrote:
I am having surgery soon. It's going to cost what's left of my deductible, about $3k. I have two credit cards, one is OpenSky secured ($200) that I only use for Netflix subscription, and a Discover with a 6k credit line. I only have a balance of $275 on that card, so my utilization is very low. (My Discover card is It with cash back and it's a new card, so I have 0% interest for the next year.) If I put the entire balance of my surgery on my card, that will put my utilization at approximately 50%. Will that be hugely detrimental to my score?

Have you thought about adding another card to the mix? What are your stats?

Re: How will 50% utilization affect score?

blindambition — Sat, 19 Sep 2020 23:25:15 GMT

All very good info. Luckily it's a Discover card. A lender who shouldn't get skittish with temporary increase. Try to at least double or triple min monthly payment though. Even more if possible. GL with procedure.

Re: How will 50% utilization affect score?

Anonymous — Sat, 19 Sep 2020 23:42:56 GMT

I'm at 59% on my CFU. Cost me about 27 pts. No biggie, I'll get them all back immediately when I PIF in June.

Re: How will 50% utilization affect score?

Anonymous — Sun, 20 Sep 2020 03:46:55 GMT

OP, might I suggest going with a Discover CLI request first? You said your current utilization is low on the card around maybe 5%, so you're in a good position to request one. Have you tried for Discover CLIs in the past? They can be hit or miss. You could come away with a $1k-$2k CLI for example, which would then absorb some of that balance you plan to carry utilization wise, where you'd be sitting at 38%-43% instead of 50% using the numbers above as an example. That's a full threshold lower and could possibly be accomplished with 30 seconds of time invested online.

Re: How will 50% utilization affect score?

blindambition — Sun, 20 Sep 2020 03:53:54 GMT

@Anonymous wrote:
OP, might I suggest going with a Discover CLI request first? You said your current utilization is low on the card around maybe 5%, so you're in a good position to request one. Have you tried for Discover CLIs in the past? They can be hit or miss. You could come away with a $1k-$2k CLI for example, which would then absorb some of that balance you plan to carry utilization wise, where you'd be sitting at 38%-43% instead of 50% using the numbers above as an example. That's a full threshold lower and could possibly be accomplished with 30 seconds of time invested online.

I don't think that is an option. OP stated the Discover is new.

Re: How will 50% utilization affect score?

Credit4Growth — Sun, 20 Sep 2020 18:46:56 GMT

@Anonymous wrote:
I'm at 59% on my CFU. Cost me about 27 pts. No biggie, I'll get them all back immediately when I PIF in June.

in June!.......

finances over credit

Re: How will 50% utilization affect score?

SouthJamaica — Sun, 20 Sep 2020 14:29:24 GMT

@Anonymous wrote:
I am having surgery soon. It's going to cost what's left of my deductible, about $3k. I have two credit cards, one is OpenSky secured ($200) that I only use for Netflix subscription, and a Discover with a 6k credit line. I only have a balance of $275 on that card, so my utilization is very low. (My Discover card is It with cash back and it's a new card, so I have 0% interest for the next year.) If I put the entire balance of my surgery on my card, that will put my utilization at approximately 50%. Will that be hugely detrimental to my score?

50% appears to be a significant threshold. In my profile going from 30+% or 40+% to 50% costs me around 10 points. So I would suggest making it 48% or 49%.

Re: How will 50% utilization affect score?

Thomas_Thumb — Sun, 20 Sep 2020 16:45:50 GMT

@Anonymous wrote:
I am having surgery soon. It's going to cost what's left of my deductible, about $3k. I have two credit cards, one is OpenSky secured ($200) that I only use for Netflix subscription, and a Discover with a 6k credit line. I only have a balance of $275 on that card, so my utilization is very low. (My Discover card is It with cash back and it's a new card, so I have 0% interest for the next year.) If I put the entire balance of my surgery on my card, that will put my utilization at approximately 50%. Will that be hugely detrimental to my score?

If you are planning to pay down the card near term and don't need any new credit, no worries. Keep it simple and put the charge on the Discover card. A high short term utilization above 50% aggregate will likely drop your score 30 to 40 points. Given your file is thin and you have a new account a temporary 40 point drop would not be surprising.

If you go this route, don't get stressed by such a drop. It is not a negative to your credit history. Know that utilization is a point in time calculation for credit score purposes. Your score will bounce back when the card is paid down. Showing ability to pay down a large balance is a good thing.

If you need to carry a balance and make progress payments, some aggregate UT and card UT milestones to get below are 49% and 29%. However, if you plan to PIF your balance in full, then milestones are a moot point. Please report back on how your score is affected after the charge and again after paydown, if possible.

Re: How will 50% utilization affect score?

Credit4Growth — Sun, 20 Sep 2020 16:43:01 GMT

@Thomas_Thumb wrote:
@Anonymous wrote:
I am having surgery soon. It's going to cost what's left of my deductible, about $3k. I have two credit cards, one is OpenSky secured ($200) that I only use for Netflix subscription, and a Discover with a 6k credit line. I only have a balance of $275 on that card, so my utilization is very low. (My Discover card is It with cash back and it's a new card, so I have 0% interest for the next year.) If I put the entire balance of my surgery on my card, that will put my utilization at approximately 50%. Will that be hugely detrimental to my score?
If you are planning to pay down the card near term and don't need any new credit, no worries. Keep it simple and put the charge on the Discover card. A high short term utilization above 50% aggregate will likely drop your score 30 to 40 points. Given your file is then and you have a new account a temporary 40 point drop would not be surprising.

If you go this route, don't get stressed by such a drop. It is not a negative to your credit history. Know that utilization is a point in time calculation for credit score purposes. Your score will bounce back when the card is paid down. Shown ability to pay down a large balance is a good thing.

If you need to carry a balance and make progress payments, some aggregate UT and card UT milestones to get below are 49% and 29%. However, if you plan to PIF your balance in full, then milestones are a moot point. Please report back on how your score is affected after the charge and again after paydown, if possible.

For my profile, I did this last month with my Discover card. Ran it up to 51% paid. Paid it down to 49%, which is the percentage that posted (I was testing the threshold). I believe my fico 8's dropped about 16-18 points.

Next it paid it down to 39% and regained about 4 or 5 points.

I love that Discover does off cycle reporting!

After a few other updates to hit my reports, later I will bring the Discover account down to 29% and observe the point gain on fico 8.

This account reports on the 12th for me so by then may reduce the utilization to below 20% or 10%. I will have to pick one. I do not want Discover to question why I am repeatedly requesting off cycle updates.

One thing I have noticed is when you (I) request an off cycle update, only the balance is updated or more accurately explained, the monthly payment that may be due is not adjusted.

Has anyone experienced that?

Re: How will 50% utilization affect score?

Thomas_Thumb — Sun, 20 Sep 2020 16:56:45 GMT

@Credit4Growth It would be nice if you put your results in a summary table and report it. One piece of missing information from your test is change in aggregate revolving utilization. Include a calculation of that at the time scores are pulled.

In the OPs case over 95% of total CL is associated with the Discover card. I'm guessing you have more than one card and your Discover as a % of total is not as high as the OP's

Re: How will 50% utilization affect score?

Anonymous — Sun, 20 Sep 2020 17:19:29 GMT

Thanks for the replies!
I will try to work it out so I'm not putting the entire balance on Discover at once. I may be able to just do a down payment with the hospital, and then get billed for the rest after insurance pays. That would allow me to pay down Discover and keep my utilization lower before paying the hospital the remainder. I would like to put as much on the card as possible due to the cash back and 0%. It won't take much to get below the 49% threshold, at least.
It sucks that my deductible reset in July, I would have had a much smaller bill if I could have had my surgery sooner, but so many of the tests I needed for clearance were on hold because of COVID.

Re: How will 50% utilization affect score?

Credit4Growth — Sun, 20 Sep 2020 17:53:02 GMT

@Thomas_Thumb wrote:
@Credit4Growth It would be nice if you put your results in a summary table and report it. One piece of missing information from your test is change in aggregate revolving utilization. Include a calculation of that at the time scores are pulled.

In the OPs case over 95% of total CL is associated with the Discover card. I'm guessing you have more than one card and your Discover as a % of total is not as high as the OP's

You are right on multiple points in your post.

I know posting the info will help but ilhis had been a computer issue for me lately, now resolved * (purchased a new one but have yet to open it up and use while at home.

I am not at home too much but when I am my time and attention I biased toward my 2 very young munchkins! Hopefully soon to be 4!

Aggregate utility is always posted on signature. I have 2 revolvers with a balance. Discover at 39% and PSECU at $1.00.

Prior to beginning my aloof undocumented testing I reduced the Discove balance to $0.00 and 0% utility. So at that point in time my Aggregate Utility was approximately 0% July 29th

Then A.U. of 7.9% while Discover was at 51% so in Fico terms this is 8% utility. August 1st-ish

Then next statement closing was August 12th... A.U. was 8% and individual was 49%

At statement closing the A.U. was 6.47%, so 6% and the Discover individual account was at 39% - this was onSept 12th.

Today the A.U.and individual utility is still the same but I have listed in my Signature as 7%

I have many other factor that will be changing over the next few day as accounts update.

I know this is not what you were looking for but I hope it gives some insight.

1 additional negative effect I notice was the Fico resiliency score changed for about 54 to 66..

That was dissatisfying... right now, for me, it is time to clean up my reports, put as much spend on my other account and PIF. I a prepping for an app in (hopefully) November with AOD who I believe does a manual review. I would like to app for a CC and then possibly car loan and Business credit before any of those two accounts hit! 👋