topic Re: Need help with tricky combination in Understanding FICO® Scoring

Need help with tricky combination

ntickrs — Wed, 13 Oct 2021 05:18:00 GMT

We're about to do a loan on a property that is a private mortgage, not a typical home loan. It's more of a business type loan, and for a variety of reasons, this is the only option. They are checking my personal credit and that's the issue -- I need a middle score of at least 720, and really would like 740 ... and I need to do it right now. I can have have them re-pull my credit for an update about 10-15 days from now.

Currently, my Score 8: Equifax 714, TransUnion 732, and Experian 740

but my Score 5, 4 & 2 are: Equifax 705, TransUnion 743, and Experian 700

The issue is entirely that I have some personal cards that the business pays for, but that carry high balances, and have for a while now. (Yes, I get why this is a problem, but first things first). Everything else on my credit is awesome -- long history, nothing new, nothing bad. Because of COVID SBA loans, there's inqueries -- but there's nothing I can do about that.

Because this is complex, some real data.

Card | Balance | Limit | Utilization
Amex | $ 1,049 | $ 35,000 | 3%
Citi | $ 305 | $ 2,560 | 12%
Amex | $ 3,021 | $ 4,000 | 76%
Citi Costco | $ 47,955 | $ 48,300 | 99%
Citi Silver | $ 62,207 | $ 63,000 | 99%
Discover | $ 19,995 | $ 20,500 | 98%
Chase | $ 7,719 | $ 8,000 | 96%
Chase | $ 19,622 | $ 20,100 | 98%
Wells Fargo | $ 0 | $ 1,000 | 0%
Wells Fargo | $ 0 | $ 7,000 | 0%

I've got just under $35k to play with that I can pay some of these down. I'll get both Amex to near zero, as well as the small Citi. Should these be higher than $0? Am I understanding right that these should they be $50-99 balances?

Then, I'm thinking that I should pay the $7719 down to $0 -- but maybe it should be down to $50? And, then to spread the rest on the two larger Citi cards so that that they come to 75-79% utilization.

When I do that in the myFico simulator, which is obviously Score 8, shows a change of Equifax +35, TransUnion +25, and Experian +10 ... how will this translate to Fico 5, 4 & 2?

Any other ideas of how to get my middle score almost immediately to at least 720, and hopefully 740?

Thanks!

What impacts Scores 5,4&2 vs. 8 - and using Score 8 simulators to help.

ntickrs — Wed, 13 Oct 2021 20:09:26 GMT

Currently, my Score 8: Equifax 714, TransUnion 732, and Experian 740

but my Score 5, 4 & 2 are: Equifax 705, TransUnion 743, and Experian 700

First question:

When I do that in the myFico simulator, which is obviously Score 8, shows a change of Equifax +35, TransUnion +25, and Experian +10 ... how will this translate to Fico 5, 4 & 2?

Because this is complex, some real data. There are ten credit cards:

Card Balance Limit Utilization
Card 01    $1,049 $35,000    3%
Card 02    $305 $2,560 12%
Card 03    $3,021 $4,000 76%
Card 04    $47,955    $48,300    99%
Card 05    $62,207    $63,000    99%
Card 06    $19,995    $20,500    98%
Card 07    $7,719 $8,000 96%
Card 08    $19,622    $20,100    98%
Card 09    $0 $1,000 0%
Card 10    $0 $7,000 0%

We've got just under $35k to play with that I can pay some of these down. We'll get both Cards 01 and 03 to near zero, as well as Card 02.

Second question:

Should these be $0 or higher than $0?

Am I understanding right that these should they be $50-99 balances?

Third Question:

I'm thinking that I should pay Card 07 down to $0, and then to spread the rest on the two larger ones (Cards 04 and 05) bringing them down to about 75-79% utilization. Better to do this? Or to focus on just one of them, or to pay off the Card 08 bringing it to 0?

In other words, what is more important -- number of cards with high utilization? Or total % utilization of all combined? Or getting more cards down from 98-99% down to say 75-79%?

What works best?

Any other ideas of how to get my middle score almost immediately to at least 720, and hopefully 740?

Thanks!

Re: Need help with tricky combination

FireMedic1 — Wed, 13 Oct 2021 22:49:38 GMT

@ntickrs wrote:
We're about to do a loan on a property that is a private mortgage, not a typical home loan. It's more of a business type loan, and for a variety of reasons, this is the only option. They are checking my personal credit and that's the issue -- I need a middle score of at least 720, and really would like 740 ... and I need to do it right now. I can have have them re-pull my credit for an update about 10-15 days from now.

Currently, my Score 8: Equifax 714, TransUnion 732, and Experian 740
but my Score 5, 4 & 2 are: Equifax 705, TransUnion 743, and Experian 700

The issue is entirely that I have some personal cards that the business pays for, but that carry high balances, and have for a while now. (Yes, I get why this is a problem, but first things first). Everything else on my credit is awesome -- long history, nothing new, nothing bad. Because of COVID SBA loans, there's inqueries -- but there's nothing I can do about that.

Because this is complex, some real data.

Card | Balance | Limit | Utilization
Amex | $ 1,049 | $ 35,000 | 3%
Citi | $ 305 | $ 2,560 | 12%
Amex | $ 3,021 | $ 4,000 | 76%
Citi Costco | $ 47,955 | $ 48,300 | 99%
Citi Silver | $ 62,207 | $ 63,000 | 99%
Discover | $ 19,995 | $ 20,500 | 98%
Chase | $ 7,719 | $ 8,000 | 96%
Chase | $ 19,622 | $ 20,100 | 98%
Wells Fargo | $ 0 | $ 1,000 | 0%
Wells Fargo | $ 0 | $ 7,000 | 0%

I've got just under $35k to play with that I can pay some of these down. I'll get both Amex to near zero, as well as the small Citi. Should these be higher than $0? Am I understanding right that these should they be $50-99 balances?

Then, I'm thinking that I should pay the $7719 down to $0 -- but maybe it should be down to $50? And, then to spread the rest on the two larger Citi cards so that that they come to 75-79% utilization.

When I do that in the myFico simulator, which is obviously Score 8, shows a change of Equifax +35, TransUnion +25, and Experian +10 ... how will this translate to Fico 5, 4 & 2?

Any other ideas of how to get my middle score almost immediately to at least 720, and hopefully 740?

Thanks!

Anything over 89% is considered maxed out and its killing you big time. Spread the $ out and get those down (In Red) as far as you can by splitting up the money. Even at 68% or below is the next threshold for gains. The 76% isnt maxed. Real close. But those 99's have got to go down. Forget simulators. They are never accuarate. Good Luck!

Re: What impacts Scores 5,4&2 vs. 8 - and using Score 8 simulators to help.

ntickrs — Wed, 13 Oct 2021 23:24:59 GMT

@FireMedic1 Super helpful -- thank you very much.

Follow on questions, if you don't mind.

1) Sounds like thresholds are: 89% and below, and 68% and below. Is there any real difference between 68-89%? (e.g., more thresholds?)

2) For those that have $0, is it better to have $50 balance on them?

3) The loan app is approved already, but they will do an additional pull right before close, and that will be where our mortgage pricing is set. Is it true that we can ask the credit card companies to update on demand to report earlier to the credit bureaus than the normal schedule?

4) Are there similar % thresholds for TOTAL revolving debt that could make a big difference to strive for (i.e., ones like the 89% and 68%)?

Thanks!

Re: What impacts Scores 5,4&2 vs. 8 - and using Score 8 simulators to help.

SoonerSoldier33 — Thu, 14 Oct 2021 01:59:15 GMT

@ntickrs wrote:
@FireMedic1 Super helpful -- thank you very much.

Follow on questions, if you don't mind.

@FireMedic1 has given you great advice. I'll add a little here.

1) Sounds like thresholds are: 89% and below, and 68% and below. Is there any real difference between 68-89%? (e.g., more thresholds?)

If you're able to get to under 69.5% so it's not rounded up to 70%, there's definitely a scoring threshold there. Statement from the Primer below:

ii. The major recognized Individual revolving utilization thresholds are believed to occur at 30%, 50%, 70%, 90%, and 100% (Some scorecards may also have lower thresholds.)

2) For those that have $0, is it better to have $50 balance on them?

No. The mortgage scores are incredibly sensitive to the Accounts With Balances (AWB) metric. You want as few accounts with any reported balance at all for higher mortgage scores. AZEO is the best case, but that's obviously not possible in your case, so as many as you can get to $0 is best.

3) The loan app is approved already, but they will do an additional pull right before close, and that will be where our mortgage pricing is set. Is it true that we can ask the credit card companies to update on demand to report earlier to the credit bureaus than the normal schedule?

You can certainly ask, but YMMV with each individual lender. Some (like Discover) are very good to report off-cycle when you ask. Others are not so great, but all they can do is say no. It may help to ask for a supervisor, get past the front line reps, explain your situation, and see if you can get an off-cycle report for those that are stubborn about it,

4) Are there similar % thresholds for TOTAL revolving debt that could make a big difference to strive for (i.e., ones like the 89% and 68%)?

Yes. There are scoring metrics for both aggregate (overall) and individual revolving utilization. The biggest score loss is believed to occur at the 30% threshold, but if you can get your aggregate down below any of the thresholds, you may see a score increase. Again, pasting info from the Primer below:

i. The major recognized Aggregate revolving utilization thresholds are believed to occur at 5%, 10%, 30%, 50%, 70%, 90%, and 100% (It's possible some scorecards could also have other thresholds.)

Thanks!

Re: What impacts Scores 5,4&2 vs. 8 - and using Score 8 simulators to help.

HowDoesThisAllWork — Thu, 14 Oct 2021 04:24:25 GMT

@SoonerSoldier33 wrote:
@ntickrs wrote:
@FireMedic1 Super helpful -- thank you very much.

Follow on questions, if you don't mind.

@FireMedic1 has given you great advice. I'll add a little here.
+1 on that

1) Sounds like thresholds are: 89% and below, and 68% and below. Is there any real difference between 68-89%? (e.g., more thresholds?)

If you're able to get to under 69.5% so it's not rounded up to 70%, there's definitely a scoring threshold there. Statement from the Primer below:

ii. The major recognized Individual revolving utilization thresholds are believed to occur at 30%, 50%, 70%, 90%, and 100% (Some scorecards may also have lower thresholds.)

2) For those that have $0, is it better to have $50 balance on them?

No. The mortgage scores are incredibly sensitive to the Accounts With Balances (AWB) metric. You want as few accounts with any reported balance at all for higher mortgage scores. AZEO is the best case, but that's obviously not possible in your case, so as many as you can get to $0 is best.

^^^^^^^^^^^
This! I was sooooo gonna comment the same thing. The FICO 5/4/2 scores seem to be EXTREMELY sensitive to recent activity (Inquiries and Accounts) in the 12 months prior to the loan and to Accounts with Balances. So, AZEO is REALLY "important" (I put important in quotes as that is going to depend on what your goals are....). Also, with respect to AZEO just keep in mind that - generally speaking - you have a chance for AZEO each and every month! There is no memory, as they say, in AZEO. :-)

3) The loan app is approved already, but they will do an additional pull right before close, and that will be where our mortgage pricing is set. Is it true that we can ask the credit card companies to update on demand to report earlier to the credit bureaus than the normal schedule?

You can certainly ask, but YMMV with each individual lender. Some (like Discover) are very good to report off-cycle when you ask. Others are not so great, but all they can do is say no. It may help to ask for a supervisor, get past the front line reps, explain your situation, and see if you can get an off-cycle report for those that are stubborn about it,

4) Are there similar % thresholds for TOTAL revolving debt that could make a big difference to strive for (i.e., ones like the 89% and 68%)?

Yes. There are scoring metrics for both aggregate (overall) and individual revolving utilization. The biggest score loss is believed to occur at the 30% threshold, but if you can get your aggregate down below any of the thresholds, you may see a score increase. Again, pasting info from the Primer below:

i. The major recognized Aggregate revolving utilization thresholds are believed to occur at 5%, 10%, 30%, 50%, 70%, 90%, and 100% (It's possible some scorecards could also have other thresholds.)

Thanks!

Re: What impacts Scores 5,4&2 vs. 8 - and using Score 8 simulators to help.

HowDoesThisAllWork — Thu, 14 Oct 2021 05:03:10 GMT

@ntickrs wrote:
We're about to do a loan on a property that is a private mortgage, not a typical home loan. It's more of a business type loan, and for a variety of reasons, this is the only option. They are checking my personal credit and that's the issue -- I need a middle score of at least 720, and really would like 740 ... and I need to do it right now. I can have have them re-pull my credit for an update about 10-15 days from now.

Currently, my Score 8: Equifax 714, TransUnion 732, and Experian 740
but my Score 5, 4 & 2 are: Equifax 705, TransUnion 743, and Experian 700

The issue is entirely that I have some personal cards that the business pays for, but that carry high balances, and have for a while now. (Yes, I get why this is a problem, but first things first). Everything else on my credit is awesome -- long history, nothing new, nothing bad. Because of COVID SBA loans, there's inqueries -- but there's nothing I can do about that.

First question:
When I do that in the myFico simulator, which is obviously Score 8, shows a change of Equifax +35, TransUnion +25, and Experian +10 ... how will this translate to Fico 5, 4 & 2?

Because this is complex, some real data. There are ten credit cards:

Card Balance Limit Utilization
Card 01    $1,049 $35,000    3%
Card 02    $305 $2,560 12%
Card 03    $3,021 $4,000 76%
Card 04    $47,955    $48,300    99%
Card 05    $62,207    $63,000    99%
Card 06    $19,995    $20,500    98%
Card 07    $7,719 $8,000 96%
Card 08    $19,622    $20,100    98%
Card 09    $0 $1,000 0%
Card 10    $0 $7,000 0%

We've got just under $35k to play with that I can pay some of these down. We'll get both Cards 01 and 03 to near zero, as well as Card 02.

Second question:
Should these be $0 or higher than $0?
Am I understanding right that these should they be $50-99 balances?

Third Question:
I'm thinking that I should pay Card 07 down to $0, and then to spread the rest on the two larger ones (Cards 04 and 05) bringing them down to about 75-79% utilization. Better to do this? Or to focus on just one of them, or to pay off the Card 08 bringing it to 0?
In other words, what is more important -- number of cards with high utilization? Or total % utilization of all combined? Or getting more cards down from 98-99% down to say 75-79%?
What works best?

Any other ideas of how to get my middle score almost immediately to at least 720, and hopefully 740?

Thanks!

I did a little math for you and you can get the number of accounts reporting $0 as the balance down to five (so, half of them) and get the other five down to 85% if you do something similar to the below:

Chase 20,000 --------> 17,000 (so, pay at least 2,622) ------- so, 85% of $20,000 is $17,000
Chase 8,000 --------> 6,800 (so, pay at least 919)
Discover 20,500 --------> 17,425 (so, pay at least 2,570)
Citi Silver 63,000 --------> 53,550 (so, pay at least 8,657)
Citi Costco 48,300 --------> 41,055 (so pay at least 6,900)

Amex 35,000 pay down to $0
Amex 4,000 pay down to $0
Citi 2,560 pay down to $0

The above takes roughly $25,000.

So you would have some $10,000 remaining. You could, with that remaining $10,000, pay down to $0 the Chase with the $8,000 Credit Limit.

That would bring you down to six accounts reporting a $0 balance. And you have roughly $3,000 remaining.

The four reporting a balance are all at 85% Utilization. I picked that 85% not so randomly. 89% is the "barrier". I wanted to be a bit below that, so that there is less a likelihood of "rounding issues" and so that you would use the least amount of your available resources. We could have also gone with 86%....I just like round numbers (and '85' is round, to my brain).

The next "barrier" is at 69%, right? We have $3,000 (again, roughly) remaining. Can we bring those 85% utilized cards down below the next "barrier"?

Chase 20,000 --------> 13,000 so, 65% of $20,000 is $13,000
Discover 20,500 --------> 13,325
Citi Silver 63,000 --------> 40,940
Citi Costco 48,300 --------> 31,395

So, does not look like we can get any of the four accounts listed above below the next "barrier". Close....kinda, on either the Chase with the $20,000 Credit Limit or the Discover with the $20,500 Credit Limit. And maybe if you did things a bit tighter (used 88% and 68% instead of my 85% and 65%)??????

So, four accounts reporting a balance. 40% of your accounts reporting a balance is much much better than 80%! How much better? You - should you do something similar - will find out! :-)

Re: What impacts Scores 5,4&2 vs. 8 - and using Score 8 simulators to help.

IntegerIntrovert — Thu, 14 Oct 2021 05:51:04 GMT

I think the hard part is going to be to get waiting for the payments to clear, getting the CC companies to report off cycle, and have the CB's update your score all in less than 2 weeks. Best of luck!

Re: What impacts Scores 5,4&2 vs. 8 - and using Score 8 simulators to help.

HeavenOhio — Thu, 14 Oct 2021 13:18:45 GMT

I think the OP's lender is likely to request a rapid rescore. I'd surmise that lenders will report because a fee is charged for the service.

Quoted from Experian:

What Is a Rapid Rescore?
The term "rapid rescore" refers to a process by which a mortgage lender submits proof to a credit reporting agency of recent changes or updates to account information that are not yet reflected on the credit report. Because mortgage loans are often time-sensitive, the lender pays a fee to the credit reporting agency to have the new information updated within an expedited time frame. Once the credit report is updated, a new credit score can be requested that will reflect those updates and ideally result in a higher score. This service is offered only through your lender, so you cannot request a rapid rescore on your own.

Re: Need help with tricky combination

SouthJamaica — Thu, 14 Oct 2021 14:23:12 GMT

@ntickrs wrote:
We're about to do a loan on a property that is a private mortgage, not a typical home loan. It's more of a business type loan, and for a variety of reasons, this is the only option. They are checking my personal credit and that's the issue -- I need a middle score of at least 720, and really would like 740 ... and I need to do it right now. I can have have them re-pull my credit for an update about 10-15 days from now.

Currently, my Score 8: Equifax 714, TransUnion 732, and Experian 740
but my Score 5, 4 & 2 are: Equifax 705, TransUnion 743, and Experian 700

The issue is entirely that I have some personal cards that the business pays for, but that carry high balances, and have for a while now. (Yes, I get why this is a problem, but first things first). Everything else on my credit is awesome -- long history, nothing new, nothing bad. Because of COVID SBA loans, there's inqueries -- but there's nothing I can do about that.

Because this is complex, some real data.

Card | Balance | Limit | Utilization
Amex | $ 1,049 | $ 35,000 | 3%
Citi | $ 305 | $ 2,560 | 12%
Amex | $ 3,021 | $ 4,000 | 76%
Citi Costco | $ 47,955 | $ 48,300 | 99%
Citi Silver | $ 62,207 | $ 63,000 | 99%
Discover | $ 19,995 | $ 20,500 | 98%
Chase | $ 7,719 | $ 8,000 | 96%
Chase | $ 19,622 | $ 20,100 | 98%
Wells Fargo | $ 0 | $ 1,000 | 0%
Wells Fargo | $ 0 | $ 7,000 | 0%

I've got just under $35k to play with that I can pay some of these down. I'll get both Amex to near zero, as well as the small Citi. Should these be higher than $0? Am I understanding right that these should they be $50-99 balances?

Then, I'm thinking that I should pay the $7719 down to $0 -- but maybe it should be down to $50? And, then to spread the rest on the two larger Citi cards so that that they come to 75-79% utilization.

When I do that in the myFico simulator, which is obviously Score 8, shows a change of Equifax +35, TransUnion +25, and Experian +10 ... how will this translate to Fico 5, 4 & 2?

Any other ideas of how to get my middle score almost immediately to at least 720, and hopefully 740?

Thanks!

1. Your idea of leaving small balances rather than zero balances is the exact opposite of what you should be doing. The mortgage scores love zero balances. So if you're paying down, pay to zero. Pay extra, so the interest won't show up as the reported balance.

2. I have discovered that the mortgage scores are even more sensitive to the NUMBER of revolving accounts with balances of 50% or more.

So bottom line:

get all high utilization balances down to 48% or less

pay anything you can down to zero, and be sure to pay extra so trailing interest doesn't spoil the zero balance

Re: Need help with tricky combination

HowDoesThisAllWork — Thu, 14 Oct 2021 14:33:42 GMT

@SouthJamaica wrote:
@ntickrs wrote:
We're about to do a loan on a property that is a private mortgage, not a typical home loan. It's more of a business type loan, and for a variety of reasons, this is the only option. They are checking my personal credit and that's the issue -- I need a middle score of at least 720, and really would like 740 ... and I need to do it right now. I can have have them re-pull my credit for an update about 10-15 days from now.

Currently, my Score 8: Equifax 714, TransUnion 732, and Experian 740
but my Score 5, 4 & 2 are: Equifax 705, TransUnion 743, and Experian 700

The issue is entirely that I have some personal cards that the business pays for, but that carry high balances, and have for a while now. (Yes, I get why this is a problem, but first things first). Everything else on my credit is awesome -- long history, nothing new, nothing bad. Because of COVID SBA loans, there's inqueries -- but there's nothing I can do about that.

Because this is complex, some real data.

Card | Balance | Limit | Utilization
Amex | $ 1,049 | $ 35,000 | 3%
Citi | $ 305 | $ 2,560 | 12%
Amex | $ 3,021 | $ 4,000 | 76%
Citi Costco | $ 47,955 | $ 48,300 | 99%
Citi Silver | $ 62,207 | $ 63,000 | 99%
Discover | $ 19,995 | $ 20,500 | 98%
Chase | $ 7,719 | $ 8,000 | 96%
Chase | $ 19,622 | $ 20,100 | 98%
Wells Fargo | $ 0 | $ 1,000 | 0%
Wells Fargo | $ 0 | $ 7,000 | 0%

I've got just under $35k to play with that I can pay some of these down. I'll get both Amex to near zero, as well as the small Citi. Should these be higher than $0? Am I understanding right that these should they be $50-99 balances?

Then, I'm thinking that I should pay the $7719 down to $0 -- but maybe it should be down to $50? And, then to spread the rest on the two larger Citi cards so that that they come to 75-79% utilization.

When I do that in the myFico simulator, which is obviously Score 8, shows a change of Equifax +35, TransUnion +25, and Experian +10 ... how will this translate to Fico 5, 4 & 2?

Any other ideas of how to get my middle score almost immediately to at least 720, and hopefully 740?

Thanks!

1. Your idea of leaving small balances rather than zero balances is the exact opposite of what you should be doing. The mortgage scores love zero balances. So if you're paying down, pay to zero. Pay extra, so the interest won't show up as the reported balance.

2. I have discovered that the mortgage scores are even more sensitive to the NUMBER of revolving accounts with balances of 50% or more.

So bottom line:

get all high utilization balances down to 48% or less

pay anything you can down to zero, and be sure to pay extra so trailing interest doesn't spoil the zero balance

Holy Toldeo! This changes things for a lot of us (at least, I believe so). Do you have any data points for that? I am guessing that it is from personal experience (or information that you have vicariously through others)? I will admit to total ignorance to this point. And I am SO VERY SORRY that I posted something (getting the balance down to 85% for as many cards as remained) that would not have helped. Not my plan or intention to post incorrect information. Thank you, @SouthJamaica , for that information.

Re: Need help with tricky combination

SouthJamaica — Thu, 14 Oct 2021 16:00:12 GMT

@HowDoesThisAllWork wrote:
@SouthJamaica wrote:
@ntickrs wrote:
We're about to do a loan on a property that is a private mortgage, not a typical home loan. It's more of a business type loan, and for a variety of reasons, this is the only option. They are checking my personal credit and that's the issue -- I need a middle score of at least 720, and really would like 740 ... and I need to do it right now. I can have have them re-pull my credit for an update about 10-15 days from now.

Currently, my Score 8: Equifax 714, TransUnion 732, and Experian 740
but my Score 5, 4 & 2 are: Equifax 705, TransUnion 743, and Experian 700

The issue is entirely that I have some personal cards that the business pays for, but that carry high balances, and have for a while now. (Yes, I get why this is a problem, but first things first). Everything else on my credit is awesome -- long history, nothing new, nothing bad. Because of COVID SBA loans, there's inqueries -- but there's nothing I can do about that.

Because this is complex, some real data.

Card | Balance | Limit | Utilization
Amex | $ 1,049 | $ 35,000 | 3%
Citi | $ 305 | $ 2,560 | 12%
Amex | $ 3,021 | $ 4,000 | 76%
Citi Costco | $ 47,955 | $ 48,300 | 99%
Citi Silver | $ 62,207 | $ 63,000 | 99%
Discover | $ 19,995 | $ 20,500 | 98%
Chase | $ 7,719 | $ 8,000 | 96%
Chase | $ 19,622 | $ 20,100 | 98%
Wells Fargo | $ 0 | $ 1,000 | 0%
Wells Fargo | $ 0 | $ 7,000 | 0%

I've got just under $35k to play with that I can pay some of these down. I'll get both Amex to near zero, as well as the small Citi. Should these be higher than $0? Am I understanding right that these should they be $50-99 balances?

Then, I'm thinking that I should pay the $7719 down to $0 -- but maybe it should be down to $50? And, then to spread the rest on the two larger Citi cards so that that they come to 75-79% utilization.

When I do that in the myFico simulator, which is obviously Score 8, shows a change of Equifax +35, TransUnion +25, and Experian +10 ... how will this translate to Fico 5, 4 & 2?

Any other ideas of how to get my middle score almost immediately to at least 720, and hopefully 740?

Thanks!

1. Your idea of leaving small balances rather than zero balances is the exact opposite of what you should be doing. The mortgage scores love zero balances. So if you're paying down, pay to zero. Pay extra, so the interest won't show up as the reported balance.

2. I have discovered that the mortgage scores are even more sensitive to the NUMBER of revolving accounts with balances of 50% or more.

So bottom line:

get all high utilization balances down to 48% or less

pay anything you can down to zero, and be sure to pay extra so trailing interest doesn't spoil the zero balance
Holy Toldeo! This changes things for a lot of us (at least, I believe so). Do you have any data points for that? I am guessing that it is from personal experience (or information that you have vicariously through others)? I will admit to total ignorance to this point. And I am SO VERY SORRY that I posted something (getting the balance down to 85% for as many cards as remained) that would not have helped. Not my plan or intention to post incorrect information. Thank you, @SouthJamaica , for that information.

1. Yes it is totally from my experience. And it goes against the conventional wisdom that has been often repeated here, that high individual account utilization is significant only as to the highest utilized account, and that those with less utilization do not receive additional penalties. Here's my post on the subject: https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/High-Utilization-Accts-FICO-2-vs-FICO-8/m-p/6361092 At that point I was formally testing. But since then, the number of high utilization accounts has been going up and down, and the scores have behaved as they did during the test.

2. Of course getting maxed out cards down to 85% would help, but I don't know how much. I just know that reducing the number of accounts with > 50% utilization helps both FICO 2 and FICO 8, and I have it more or less quantified for my profile.

So if I were in OP's position and wanted to shoot for a quick boost in the mortgage scores I would (a) try to get all accounts to 48% or less and (b) knock any low hanging fruit (accounts with small balances) down to zero reporting.

Re: Need help with tricky combination

HowDoesThisAllWork — Thu, 14 Oct 2021 19:17:11 GMT

@SouthJamaica wrote:
@HowDoesThisAllWork wrote:
@SouthJamaica wrote:
@ntickrs wrote:
We're about to do a loan on a property that is a private mortgage, not a typical home loan. It's more of a business type loan, and for a variety of reasons, this is the only option. They are checking my personal credit and that's the issue -- I need a middle score of at least 720, and really would like 740 ... and I need to do it right now. I can have have them re-pull my credit for an update about 10-15 days from now.

Currently, my Score 8: Equifax 714, TransUnion 732, and Experian 740
but my Score 5, 4 & 2 are: Equifax 705, TransUnion 743, and Experian 700

The issue is entirely that I have some personal cards that the business pays for, but that carry high balances, and have for a while now. (Yes, I get why this is a problem, but first things first). Everything else on my credit is awesome -- long history, nothing new, nothing bad. Because of COVID SBA loans, there's inqueries -- but there's nothing I can do about that.

Because this is complex, some real data.

Card | Balance | Limit | Utilization
Amex | $ 1,049 | $ 35,000 | 3%
Citi | $ 305 | $ 2,560 | 12%
Amex | $ 3,021 | $ 4,000 | 76%
Citi Costco | $ 47,955 | $ 48,300 | 99%
Citi Silver | $ 62,207 | $ 63,000 | 99%
Discover | $ 19,995 | $ 20,500 | 98%
Chase | $ 7,719 | $ 8,000 | 96%
Chase | $ 19,622 | $ 20,100 | 98%
Wells Fargo | $ 0 | $ 1,000 | 0%
Wells Fargo | $ 0 | $ 7,000 | 0%

I've got just under $35k to play with that I can pay some of these down. I'll get both Amex to near zero, as well as the small Citi. Should these be higher than $0? Am I understanding right that these should they be $50-99 balances?

Then, I'm thinking that I should pay the $7719 down to $0 -- but maybe it should be down to $50? And, then to spread the rest on the two larger Citi cards so that that they come to 75-79% utilization.

When I do that in the myFico simulator, which is obviously Score 8, shows a change of Equifax +35, TransUnion +25, and Experian +10 ... how will this translate to Fico 5, 4 & 2?

Any other ideas of how to get my middle score almost immediately to at least 720, and hopefully 740?

Thanks!

1. Your idea of leaving small balances rather than zero balances is the exact opposite of what you should be doing. The mortgage scores love zero balances. So if you're paying down, pay to zero. Pay extra, so the interest won't show up as the reported balance.

2. I have discovered that the mortgage scores are even more sensitive to the NUMBER of revolving accounts with balances of 50% or more.

So bottom line:

get all high utilization balances down to 48% or less

pay anything you can down to zero, and be sure to pay extra so trailing interest doesn't spoil the zero balance
Holy Toldeo! This changes things for a lot of us (at least, I believe so). Do you have any data points for that? I am guessing that it is from personal experience (or information that you have vicariously through others)? I will admit to total ignorance to this point. And I am SO VERY SORRY that I posted something (getting the balance down to 85% for as many cards as remained) that would not have helped. Not my plan or intention to post incorrect information. Thank you, @SouthJamaica , for that information.
1. Yes it is totally from my experience. And it goes against the conventional wisdom that has been often repeated here, that high individual account utilization is significant only as to the highest utilized account, and that those with less utilization do not receive additional penalties. Here's my post on the subject: https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/High-Utilization-Accts-FICO-2-vs-FICO-8/m-p/6361092 At that point I was formally testing. But since then, the number of high utilization accounts has been going up and down, and the scores have behaved as they did during the test.

2. Of course getting maxed out cards down to 85% would help, but I don't know how much. I just know that reducing the number of accounts with > 50% utilization helps both FICO 2 and FICO 8, and I have it more or less quantified for my profile.

So if I were in OP's position and wanted to shoot for a quick boost in the mortgage scores I would (a) try to get all accounts to 48% or less and (b) knock any low hanging fruit (accounts with small balances) down to zero reporting.

VERY INTERESTING.....I read all 16 contributions to that post. I wonder how "profile-specific" your results might be?

Re: Need help with tricky combination

ntickrs — Fri, 15 Oct 2021 20:03:12 GMT

First, thank you to @SouthJamaica , @HowDoesThisAllWork , @HeavenOhio , @SoonerSoldier33 and @FireMedic1 -- you are all so incredibly helpful you all are, and I truly appreciate it. Shoutout: If you haven't looked, you should take the time to read through Credit Scoring Primer

In part to make sure that I have it straight, and in part to make it easier for others to learn from, here's what I'm hearing ... not just as a recap, but what the focus should be, in order of priority:

About percentages

All % mentioned below are numbers you need to be BELOW, not at.
Scores only use whole number percentages, and round to nearest point. So 69.5% rounds to 70%, but 69.4% rounds to 69%.
Watch out for extra interest or fees that creep in even as you think you’re at a zero balance. If you’ve been carrying a balance, you need to ask what those charges are, and pay for them ahead of statement close (e.g., pay extra so that the interest will not show up in the new balance).
Be safe, have room for error. e.g., if the threshold is 70%, go to 68.5% or at least 68.9% to avoid errors.
Penalties are based on percentages, not dollar amounts. A $1000 limit card with 80% utilization is worse than a $20,000 limit card with the same % utilization, even though the actual dollar amounts are vastly different. As @aj2121 said, “If any card reports at 90%, even if that amount is less than 1% of your overall utilization, it is going to cost you quite a few points.”

Priorities:

Note: This is when focused on mortgage Scores 5, 4 & 2 — not necessarily on other types of scores.

Overall (aggregate) utilization is “king” and is higher priority than individual. The aggregate utilization thresholds are believed to occur at 5%, 10%, 30%, 50%, 70%, 90% and 100%.
For mortgage Scores 5, 4 & 2, as many $0 balance (true 0% utilization) cards as possible is important the mortgage scores are incredibly sensitive to the Accounts With Balances (AWB) metric.
1. AZEO (all zero except one) is the goal for your accounts (e.g., all credit cards at zero balance each month except one).
2. Even more sensitivity for the number of accounts with balances greater than 50% utilization
The major recognized INDIVIDUAL revolving utilization thresholds are believed to occur at 30%, 50%, 70%, 90%, and 100% (Some scorecards may also have lower thresholds.)
I’ve heard Individual utilization is taken as the highest of any of the cards, and not as an average. Is this true?

Additional Notes:

Most credit cards will report to all 3 credit bureaus within a few days of statement due date, the amount reflected at statement close (the amount that goes on the next statement).
You can ask the credit card companies to force an update to report earlier to the credit bureaus between the normal update dates, but they may or may not. Discover, for example, is good about reporting “off-cycle” on request. No problem in asking, even ask for a supervisor to push — the worst they will say is “no”
Really good illustration that I saw in a thread here (but I'm sorry, I cannot find it again) that showed this graph (note: FICO 8 Score):

Graph of FICO 08 Score by Credit Card Utilization

Does anyone know if graph would be similar when it applies to Mortgage Scores?

The Specific Action Plan (in my case):

Presuming that we can push Amex, Discover, Citi, and Chase to report early (anyone know if any of those are an issue?), then I think the plan is this. (Note: Total estimated interest rounded up is $2110 — so that’s added to all plans to stay level, and not mentioned below, but would be done as well. Note2: Presume any additional spending will be paid for as well.)

As of this writing, this is what my Scores look like:

Score 8: EQ/714 -- TU/723 -- EX/740

Scores 5/4/2: EQ/705 -- TU/753 -- EX/700

Note: I only care about the Scores 5/4/2 right now -- and even at that, I only care about the middle Score 5/4/2. That likely means a focus on Equifax. There's big savings on the loan we're approved on at 720 and 740 for the middle score. Makes a massive difference ... $7-14k or more in points to achieve the same monthly payment depending on the LTV and rate I choose.

The myFICO simulator (yeah, I know, figuring some data is better than no data) shows these increases if each amt in the first column is paid (in addition to the interest). Of course, the simulator is only looking at aggregate utilization %, and not each card, or how many are at 0. These are the lowest pay down amounts for each of those.

Simulator Results Based on Amounts Paid Down

If EQ would really jump by 35 points (not just on Score 8 as shown in the simulator, but on Score 2/4/5 where I need it), that would take me to 740 and would be AWESOME. Do we think the changes seen in Score 8 would be seen in Score 2/4/5 as well?

Maybe to be more specific, with these calculations, I think these are the options that I have.

NOTE: See updated post below -- Plot twist!

Scenarios to Explore

Scenario 1: Get aggregate cc utilization below 60%. This is expensive -- do we think that it really would make a difference compared to Scenario 2 (just over 60%)? or 64% as in Scenario 3?

Scenario 4: About $4k less to do, seems that compared to Scenario 3, Scenario 4 is definitely not a good idea.

Scenario 5: Not a lot of savings, not worth it.

Scenario 6: The minimum approach to do.

So, the decision comes down to ...

Is there a real difference between Scenarios 1/2/3?
With whatever answer(s) to #1 to compare to, compared to Scenario 6

I know there's a lot here, and I so appreciate everyone's help. I hope this detail and layout will really make a difference, not just for me, but others.

Thanks!

Re: Need help with tricky combination

ntickrs — Fri, 15 Oct 2021 19:53:23 GMT

Plot twist!

This morning I woke to find an email from Discover that, without asking, they had bumped my credit limit from $20,500 to $25,500. Everything else equal, I think this can only help on mortgage FICO Scores 5/4/2 because it would decrease utilization % ... right?

This changes my earlier scenarios. And, since I had to decide last night (payment date was yesterday), I decided to clear one card completely.

This is a screenshot of my scenarios from Excel:

Scenarios (Excel Calcs)

The question now is:

Scenario 1 vs. 2: Two cards brought down to lowest possible thresholds (68.9% and 48.9%), and the aggregate goes below 60%.

Does it matter if two cards are lower threshholds, if there are two other cards at higher threshholds?
I don't believe there's an aggregate thresshold at 60%, right?

Scenario 2 vs. 2A: Same but 2A leaves a card at 78%

Similar to last comparison -- effectively, for individual utilization %, is only the highest % considered? Or (aside from aggregate utilization, and presuming no card is more than 88.9%), does the individual utilization matter?

Scenario 3 vs. 2/2A: Same as 2A except both Discover and Chase IHG left as is, or at 88.9% to avoid maxed out flag

Same question as last comparison, I believe.

I need to execute the next steps today because of there's some payment dates today and this weekend that I want to get payments in so they report as I want next week!

Thanks!

Re: Need help with tricky combination

SouthJamaica — Fri, 15 Oct 2021 19:34:44 GMT

@ntickrs wrote:
Plot twist!
This morning I woke to find an email from Discover that, without asking, they had bumped my credit limit from $20,500 to $25,500. Everything else equal, I think this can only help on mortgage FICO Scores 5/4/2 because it would decrease utilization % ... right?

This changes my earlier scenarios. And, since I had to decide last night (payment date was yesterday), I decided to clear one card completely.

Sorry to do this as a link, but I'm unable to put in a picture, or table. This is a screenshot of my scenarios from Excel:
https://paste.pics/6982dd3e24c8bbfe878b9fb5a9f72110

The question now is:
Scenario 1 vs. 2: Two cards brought down to lowest possible thresholds (68.9% and 48.9%), and the aggregate goes below 60%.
Does it matter if two cards are lower threshholds, if there are two other cards at higher threshholds?
I don't believe there's an aggregate thresshold at 60%, right?
Scenario 2 vs. 2A: Same but 2A leaves a card at 78%
Similar to last comparison -- effectively, for individual utilization %, is only the highest % considered? Or (aside from aggregate utilization, and presuming no card is more than 88.9%), does the individual utilization matter?
Scenario 3 vs. 2/2A: Same as 2A except both Discover and Chase IHG left as is, or at 88.9% to avoid maxed out flag
Same question as last comparison, I believe.
I need to execute the next steps today because of closing dates -- so any advice would help ... sorry again about having to link the screenshot. (Same as one above: https://paste.pics/6982dd3e24c8bbfe878b9fb5a9f72110 )

Thanks!

1. I don't know the answers to your questions.

2. I don't think 10-15 days is enough time to let the changes filter through the system.

Re: Need help with tricky combination

ntickrs — Fri, 15 Oct 2021 19:38:56 GMT

@SouthJamaica Thanks!

I believe that timing is typically about a few things.

1) when something is reported on the normal cycle (e.g., a few days after billing cycle closes)

2) whether or not you can force an update of reporting by a manual request for an off-cycle report

3) when the credit report is pulled again by the lender

I think that between coordinating all the above, along with making the right payments at the right time, I may be able to pull this off. Is there another part of "filter through the system" that I'm missing?

Re: Need help with tricky combination

Anonymous — Fri, 15 Oct 2021 20:42:07 GMT

@ntickrs wrote:

I’ve heard Individual utilization is taken as the highest of any of the cards, and not as an average. Is this true?

Individual utilization is per card. The card with the highest utilization is going to have an effect on your score, especially if it is greater than 30%, smaller thresholds may exist but haven't been identified. As @SouthJamaica's theory and testing shows the individual utilization of cards other than the highest one can impact the score. There are some people that do not think this is true; but I believe it to be true based on SJ's data and on my own data (I don't know if I have posted all of it on the forums yet, but it supports SJ's theory and results). Not sure if that answers your question??

Re: Need help with tricky combination

Anonymous — Fri, 15 Oct 2021 20:49:18 GMT

@ntickrs Take a look at this thread

Since EQ is the score you are trying to boost I think you are going to benefit from knocking out as many balances as possible. The above thread has info related specifically to EQ5 and AWB, which you may find helpful.

Re: Need help with tricky combination

Anonymous — Fri, 15 Oct 2021 20:57:47 GMT

@ntickrs wrote:
Plot twist!
This morning I woke to find an email from Discover that, without asking, they had bumped my credit limit from $20,500 to $25,500. Everything else equal, I think this can only help on mortgage FICO Scores 5/4/2 because it would decrease utilization % ... right?
Correct, more utilization padding will only help. It may not give you a direct score improvment, but it might.

The question now is:
Scenario 1 vs. 2: Two cards brought down to lowest possible thresholds (68.9% and 48.9%), and the aggregate goes below 60%.
Does it matter if two cards are lower threshholds, if there are two other cards at higher threshholds?
I don't believe there's an aggregate thresshold at 60%, right?
Scenario 2 vs. 2A: Same but 2A leaves a card at 78%
Similar to last comparison -- effectively, for individual utilization %, is only the highest % considered? Or (aside from aggregate utilization, and presuming no card is more than 88.9%), does the individual utilization matter?
Individual utilization matters a lot more for F8 than mortgage scores, I would focus more on overall utilization and getting all cards below 90%, as there is definitely a penalty on mortgage scores and F8 for having >90% utilization on ANY card.
Scenario 3 vs. 2/2A: Same as 2A except both Discover and Chase IHG left as is, or at 88.9% to avoid maxed out flag
Same question as last comparison, I believe.

I need to execute the next steps today because of there's some payment dates today and this weekend that I want to get payments in so they report as I want next week!

Thanks!