topic Re: Best 5-4-2 Fico Scenario For 1 credit card in Understanding FICO® Scoring

Best 5-4-2 Fico Scenario For 1 credit card

marmofico — Thu, 01 May 2025 00:16:06 GMT

I'm looking to apply for a HELOC or Home Equity loan withing the next month or 2, primarily to fund an ADU.
Currently have woked up to a great Fico 8 score of 820

My current credit mix:
1 mortgage (age 7 years)
2 installment loans (Farm Equipment - age 3 years, Auto age 2 years)

1 credit card that is typically paid off each month (age 31 years), current utilization < 10%
No late payments ever

My understanding from reading these forums is that multiple revolving accounts where 1 has a small balance and the others report a zero balance is ideal. At this point, adding an additional credit card no matter the balance is going to hurt more than help. So what is the best strategy for optimizing my score with only the one card? Bring it to a zero balance or maintain a very small balance ( 1% utilization)? Anything else? Or am I overthinking?

Thanks!

Re: Best 5-4-2 Fico Scenario For 1 credit card

Seatac — Thu, 01 May 2025 00:40:51 GMT

Have you spoken to your mortgage company yet? If not then see if they will give you underwriting requirements.

Ask how recent new cards, with 0 balances, affect their models.

Usually it is the Average Age of Accounts that mtg looks at.

With a 31 year card plus two 2-month cards is 376 months of credit divided by 3 cards is 125 month of credit, and this does not include the 84 months of mtg payments or the 60 months of installment loans.

I can't see a problem getting a large HELOC with a low interest rate.

Re: Best 5-4-2 Fico Scenario For 1 credit card

Thomas_Thumb — Thu, 01 May 2025 03:30:03 GMT

Without a doubt, the best strategy is to have the card report a small balance and then PIF the statement balance. The amount reporting should be between $5 and 9% of the card's credit limit.

If the card reports $0 your score will be penalized - typically 10-20 points on The older mortgage Ficos. Why? Fico penalizes for "no recent revolving activity". Fico equates a $0 balance with no account activity even when an account has been used.

I suspect the OP's mortgage Ficos will exceed 780 as long as the revolving account reports a small monthly balance ... And no new accounts are opened.

Note: The older Fico 5/4/2 models do want to see only 1 card reporting a balance but don't really penalize for (1 of 1) vs (1 of 2) vs (1 of 3).

For cards reporting small balances on Fico 5/4/2

A) 1 of 1 better than 0 of 1

B) 1 of 2 better than 2 of 2 better than 0 of 2

C) 1 of 3 better than 2 of 3 better than 3 of 3 which is about the same as 0 of 3. (With Fico 8, 3 of 3 is still much better than 0 of 3)

Re: Best 5-4-2 Fico Scenario For 1 credit card

SouthJamaica — Thu, 01 May 2025 17:16:10 GMT

@marmofico wrote:
I'm looking to apply for a HELOC or Home Equity loan withing the next month or 2, primarily to fund an ADU.
Currently have woked up to a great Fico 8 score of 820

My current credit mix:
1 mortgage (age 7 years)
2 installment loans (Farm Equipment - age 3 years, Auto age 2 years)
1 credit card that is typically paid off each month (age 31 years), current utilization < 10%
No late payments ever

My understanding from reading these forums is that multiple revolving accounts where 1 has a small balance and the others report a zero balance is ideal. At this point, adding an additional credit card no matter the balance is going to hurt more than help. So what is the best strategy for optimizing my score with only the one card? Bring it to a zero balance or maintain a very small balance ( 1% utilization)? Anything else? Or am I overthinking?

Thanks!

The best strategy is to do nothing. You're in fine shape. Don't upset the apple cart. Yes you're overthinking.