topic Re: 1% Utilization=Very Good, not Exceptional in Understanding FICO® Scoring

1% Utilization=Very Good, not Exceptional

jeliop — Thu, 11 Feb 2021 11:20:32 GMT

Hello to all!

Just out of curiosity, why would an overall utilization rate of 1% be considered "Very Good", and not "Exceptional"? Not complaining, just curious. All other indicators are "Exceptional", except for "Fair" by TU and EX for "Amount of New Credit", because of inquiries (4).

Scores: EQ 798, TU 792, EX 787

Thanks!

Re: 1% Utilization=Very Good, not Exceptional

GApeachy — Thu, 11 Feb 2021 11:51:54 GMT

(Same with Ds- 1% utl on Experian)

Is what you're looking at on Exp? If so, what's the rating under credit history under Credit Summary?

Re: 1% Utilization=Very Good, not Exceptional

Anonymous — Thu, 11 Feb 2021 12:13:14 GMT

Sounds like a bogus fluff CMS rating to me and such things can be ignored. What source are you using?

But, to entertain the thread, consider that not all 1% utilizations are created equal. It could mean $0 balances on all but one account and that balance on the one account brings overall utilization up to 1%. It could also mean 1% utilization across all accounts, which would also arrive at 1% utilization. Another thing, there are some profiles where a true 1% may constitute a large dollar amount (say $2000+) that may result in a scoring penalty.

Re: 1% Utilization=Very Good, not Exceptional

jeliop — Thu, 11 Feb 2021 12:19:14 GMT

Hi!

All I see is this:

Low Credit Usage

Thanks!

Re: 1% Utilization=Very Good, not Exceptional

jeliop — Thu, 11 Feb 2021 12:32:26 GMT

Hi, I have 9 CCs, with a total CL of $65,000. Total balances: $500. Thanks!

Re: 1% Utilization=Very Good, not Exceptional

SouthJamaica — Thu, 11 Feb 2021 14:00:51 GMT

@jeliop wrote:
Hello to all!
Just out of curiosity, why would an overall utilization rate of 1% be considered "Very Good", and not "Exceptional"? Not complaining, just curious. All other indicators are "Exceptional", except for "Fair" by TU and EX for "Amount of New Credit", because of inquiries (4).

Scores: EQ 798, TU 792, EX 787

Thanks!

No reason in the world.

Re: 1% Utilization=Very Good, not Exceptional

jeliop — Thu, 11 Feb 2021 14:02:24 GMT

@SouthJamaica wrote:
@jeliop wrote:
Hello to all!
Just out of curiosity, why would an overall utilization rate of 1% be considered "Very Good", and not "Exceptional"? Not complaining, just curious. All other indicators are "Exceptional", except for "Fair" by TU and EX for "Amount of New Credit", because of inquiries (4).

Scores: EQ 798, TU 792, EX 787

Thanks!
No reason in the world.

Many thanks!

Re: 1% Utilization=Very Good, not Exceptional

Anonymous — Thu, 11 Feb 2021 17:00:07 GMT

@jeliop wrote:
Hi, I have 9 CCs, with a total CL of $65,000. Total balances: $500. Thanks!

@Anonymous weren't you talking about raw number thresholds for revolving balances? Was I reading $500 was one? I could be totally off-base, though, lol

Re: 1% Utilization=Very Good, not Exceptional

Anonymous — Thu, 11 Feb 2021 17:47:21 GMT

@Anonymous wrote:
@jeliop wrote:
Hi, I have 9 CCs, with a total CL of $65,000. Total balances: $500. Thanks!
@Anonymous weren't you talking about raw number thresholds for revolving balances? Was I reading $500 was one? I could be totally off-base, though, lol

@Anonymous there are raw dollar thresholds, but $500 is not one. There is a report of one somewhere around there but I think that was on a mortgage score, I don't recall.

@jeliop how many accounts with a balance do you have? If it's more than one, that's likely why it's very good.

Re: 1% Utilization=Very Good, not Exceptional

jeliop — Thu, 11 Feb 2021 21:36:18 GMT

@Anonymous wrote:
@Anonymous wrote:
@jeliop wrote:
Hi, I have 9 CCs, with a total CL of $65,000. Total balances: $500. Thanks!
@Anonymous weren't you talking about raw number thresholds for revolving balances? Was I reading $500 was one? I could be totally off-base, though, lol
@Anonymous there are raw dollar thresholds, but $500 is not one. There is a report of one somewhere around there but I think that was on a mortgage score, I don't recall.

@jeliop how many accounts with a balance do you have? If it's more than one, that's likely why it's very good.

3 accounts with a total balance of $500.00.

Re: 1% Utilization=Very Good, not Exceptional

Anonymous — Thu, 11 Feb 2021 22:05:35 GMT

@jeliop wrote:
@Anonymous wrote:
@Anonymous wrote:
@jeliop wrote:
Hi, I have 9 CCs, with a total CL of $65,000. Total balances: $500. Thanks!
@Anonymous weren't you talking about raw number thresholds for revolving balances? Was I reading $500 was one? I could be totally off-base, though, lol
@Anonymous there are raw dollar thresholds, but $500 is not one. There is a report of one somewhere around there but I think that was on a mortgage score, I don't recall.

@jeliop how many accounts with a balance do you have? If it's more than one, that's likely why it's very good.
3 accounts with a total balance of $500.00.

@jeliop that is why it is very good instead of exceptional because you have 3 accounts with a balance. Bring it down to 1 and you will see exceptional.

Re: 1% Utilization=Very Good, not Exceptional

jeliop — Fri, 12 Feb 2021 15:45:41 GMT

@Anonymous wrote:
@jeliop wrote:
@Anonymous wrote:
@Anonymous wrote:
@jeliop wrote:
Hi, I have 9 CCs, with a total CL of $65,000. Total balances: $500. Thanks!
@Anonymous weren't you talking about raw number thresholds for revolving balances? Was I reading $500 was one? I could be totally off-base, though, lol
@Anonymous there are raw dollar thresholds, but $500 is not one. There is a report of one somewhere around there but I think that was on a mortgage score, I don't recall.

@jeliop how many accounts with a balance do you have? If it's more than one, that's likely why it's very good.
3 accounts with a total balance of $500.00.
@jeliop that is why it is very good instead of exceptional because you have 3 accounts with a balance. Bring it down to 1 and you will see exceptional.

Many thanks!!!

Re: 1% Utilization=Very Good, not Exceptional

Iusedtolurk — Fri, 12 Feb 2021 17:33:37 GMT

@Anonymous wrote:
@jeliop wrote:
@Anonymous wrote:
@Anonymous wrote:
@jeliop wrote:
Hi, I have 9 CCs, with a total CL of $65,000. Total balances: $500. Thanks!
@Anonymous weren't you talking about raw number thresholds for revolving balances? Was I reading $500 was one? I could be totally off-base, though, lol
@Anonymous there are raw dollar thresholds, but $500 is not one. There is a report of one somewhere around there but I think that was on a mortgage score, I don't recall.

@jeliop how many accounts with a balance do you have? If it's more than one, that's likely why it's very good.
3 accounts with a total balance of $500.00.
@jeliop that is why it is very good instead of exceptional because you have 3 accounts with a balance. Bring it down to 1 and you will see exceptional.

@Anonymous Such a small adjustment for a major word rating change Very Good to Exceptional would that change also possibly result in an additional point or 2?

Re: 1% Utilization=Very Good, not Exceptional

Anonymous — Fri, 12 Feb 2021 18:21:44 GMT

A fluff word rating change does not have to result in a score change.

On one profile, moving from 3 accounts with balances to 1 account with a balance could result in some slight score gains, where on another it could result in no score gains at all. Either way the CMS would change the rating displayed if that was the factor holding it back.

Re: 1% Utilization=Very Good, not Exceptional

Anonymous — Fri, 12 Feb 2021 21:02:29 GMT

@Iusedtolurk basically its like @Anonymous said, it will depend on the individual profile, however if it's the MF score ingredient section, it's not fluff; if it's another CMS it's likely fluff.

The only CMS Score ingredient section we know to be tied to the algorithm is the one from MF per the experts.

So, if it is from the MF score ingredient section, there would therefore be a higher likelihood of a point change, imho.

Re: 1% Utilization=Very Good, not Exceptional

Anonymous — Sat, 13 Feb 2021 19:32:49 GMT

In messing around I found that if your balance is too low or zero it's a hit on your score. Remember they all want you spending money if they think you're not using your cards or not enough they'll ding you.

Re: 1% Utilization=Very Good, not Exceptional

Anonymous — Sat, 13 Feb 2021 19:46:10 GMT

@Anonymous wrote:
In messing around I found that if your balance is too low or zero it's a hit on your score. Remember they all want you spending money if they think you're not using your cards or not enough they'll ding you.

@Anonymous that's a very well-known feature of the algorithm. We call it the AZ loss. It has nothing to do with utilization. Whenever all revolving balances are equal to $0, you experience a loss.

utilization and balances are tracked separately. They are separate metrics and can cause score change independently. I believe the reason for that loss is because the algorithm is a point in time algorithm. Therefore when it sees zero balances, it doesn't know how long they've been zero because it's not programmed to look for that.

Therefore assumes you're not using your credit and are not currently displaying the ability to manage such credit.

You are therefore awarded points whenever you are actively using your credit and those points are not awarded when you are not actively using your credit, as measured by whether you have any revolving balances at the time the score is generated.

so when you have all revolvers report $0, it appears to be a loss to you because you're used to having balances. You are used to being awarded those points for having balances, but as those balances increase across thresholds, those points are taken back and even more are taken, due to increased balances and utilization.

read the Scoring Primer linked at the top of my signature for a deeper explanation.

Re: 1% Utilization=Very Good, not Exceptional

Anonymous — Sat, 13 Feb 2021 19:52:40 GMT

I believe I was saying essentially the same thing but you described it much better.

Gotta remember that the goal for lenders here is to get you to spend money, so inactive cards in a sense look bad to the scoring algorithm, as you suggest.

Re: 1% Utilization=Very Good, not Exceptional

Anonymous — Sat, 13 Feb 2021 20:19:01 GMT

@Anonymous wrote:
I believe I was saying essentially the same thing but you described it much better.
Gotta remember that the goal for lenders here is to get you to spend money, so inactive cards in a sense look bad to the scoring algorithm, as you suggest.

@Anonymous yes I was just trying to give you more information about it. And yes lenders want to see active utilization of both revolving and loan credit types, as they demonstrate restraint and reliability, imo.

No, inactive cards don't look bad, it's no balance on any card that looks worse than having a balance on at least one card. And again, once you start having balances on multiple cards you start losing points for that, so you want a balance, but not on many cards, one is recommended as best. That's another scoring metric.